Open banking enables secure data sharing between banks and third parties, facilitating payments and information access. Beyond UK/Europe (initial markets), we now see other regions at the cusp of open banking adoption, driven by both regulatory and market forces.

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General Commentary & Highlights

• Open banking allows third parties to access banking data (through consumer consent) via APIs – powering innovative use cases in payments and information aggregation.
• Open banking adoption is driven by a mix of regulatory and market forces. UK & Europe were one of the first regions to adopt. N. America and APAC are emerging markets where open banking adoption is picking up.
• Open banking evolved rapidly in the UK.  Adoption in Europe continues to be fragmented. Information access use cases have experienced the highest adoption.
• Open banking payments are yet to be a commercial success in mainstream e-commerce (UK, Europe), although the supplier fintech landscape remains competitive.
• India’s regulatory approach to open banking is working, with the mass adoption of Unified Payments Interface (UPI) paving the way for additional use cases.
• Open banking in the U.S. has so far been market led. Information aggregation fintechs (e.g., Plaid) have enjoyed success in bank connectivity with regulations steadily taking shape.
• There are several industry actors that can adopt open banking to disrupt existing rails, crystalize new value creation opportunities.

Key Disruptors in Open Banking

• B2B Payments Fintechs, Office of CFO SaaS: Opportunity to embed open banking paymetns with CFO workflow automation solutions; Disrupt paper checks
  Information access can enrich existing products (e.g., improved reconciliation)
• Big Tech Companies: Play a meaningful role in developing front-end C2B payments apps/wallets that operate on open banking technology. Use information access to strengthen core IP/data
  
• Processors / Merchant Payments Value in enriching merchant payment solutions with information access. Offer open banking payments for select verticals and use cases. Proximity with banking access, gross margin expansion
  
• Alternative Payment Providers (e.g., A2A): Competes with cards (e.g., in the US), position in underserved verticals. Serves specific verticalized needs (e.g., financial services, i-gaming). Opportunities for margin expansion via information access
  
• Fraud platforms /Digital identity Fintech: Obvious product synergies with open banking information access. Ability to layer new products on top of existing (e.g., confirmation of payee)
  
• Mega-Retailers: Can create own branded payment wallets for consumers that run on A2A. Challenge cards, by layering consumer incentives, value-added-services
  
• Credit Unions / Tier II Banks / Bank Consortiums: Can monetize information access for credit scoring, affordability checks. Play a critical role in distributing information access (e.g., via Open APIs)
  

Please do not hesitate to contact Anupam Majumdar at Anupam@FlagshipAP.com with comments or questions.