In the run-up to Christmas, I’ve been asked a few times what I’d like Santa to bring me this year. Outside of the obvious — peace, goodwill and ski boots, I’d love for the open banking economy to continue to grow in 2020. In 2019 we saw significant progress; people started using products like Payment Initiation to make faster and more cost-effective online purchases, and leveraging open banking to take control of their financial data and livelihoods.
At TrueLayer, we are proud to partner with companies like Plum and Anna that leverage open banking to empower users with the tools they need to manage money more effectively. I’m excited to see the benefits of open banking expand beyond budgeting, savings, and payments, and into new areas like insurance and investments.
Open banking evolved this year. Businesses and investors began to take it seriously and understand its impact. Large banks and credit card providers secured partnerships with open banking-based startups, like TrueLayer. There are more and more companies using Open Banking to create new and better financial products. Now is the time to look ahead. Below are my predictions for the state of open banking in 2020.
Time for general public understanding
Early adoption of open banking has taken place. In 2020, I expect to see widespread adoption and understanding of open banking among consumers. It will reach mainstream adoption in the UK following an explosion of new use cases; investment, insurance, KYC, renting, money management, loans, and remittances will be hit by a wave of new open banking enabled functionalities. We will likely see the rise of a financial ‘super app’ — a platform that will pull together the best open banking use cases into a single solution.
Removing friction from Payments
Alongside open banking, Payment Initiation’s popularity will increase significantly in 2020. Its benefits are hard to ignore: Payment Initiation removes friction from the flow of money between financial applications. That means cheaper, faster, and more secure payments for businesses and consumers. Adoption in the UK will increase and shorten the gap to other European countries, as it becomes more established as a way of paying and transferring money.
Adoption of open banking-based apps will increase across Europe
Driven by the decline of screen scraping and other less-secure techniques, European countries will start closing the gap when it comes to the adoption of open banking-based apps. Consumers in those countries will see a rise in applications that will improve their financial lives.
Open banking will go beyond Europe
New markets across the globe will continue to adopt open banking. Australia will be the country to watch. The Australian market will most likely develop quickly, building on the lessons learned from Europe. 2020 will be the year of the Consumer Data Right legislation coming into its own, mandating the same kind of API-based system the UK adopted in 2017.
The growth of banking APIs and open banking-style regulation will continue to evolve in major economies such as the US, Canada, Japan, and Brazil. Hong Kong and Singapore also have progressive views towards it. A lot of the political momentum behind these changes will be driven by open banking in Europe and, in particular, the UK’s booming fintech industry.
By the end of 2020, open banking will be the dominant force in global finance, profoundly changing the way people experience and manage money. Happy New Year!