Open Banking in 2024: A Look Ahead

As we approach the end of 2023, it’s a time of reflection and anticipation in the world of fintech. Looking back at the developments and trends over the past year and forward to the upcoming year, we find open banking poised to enter a new phase of maturity in 2024. The Fintech Times gathered insights from industry leaders to shed light on what to expect in the world of open banking.

Andrea Varga, Head of Innovation at Aryza, a financial software company, believes that open banking is on the verge of becoming mainstream. She notes that a growing number of consumers, businesses, and government bodies are embracing its services and applications.

According to Varga, «Next year, 2024, is poised to be a turning point for open banking. The anticipated increase in adoption, diversification of services, and the continued growth of open banking payments signal a significant transformation in the financial sector. This evolution promises to benefit SMEs, consumers, businesses, and governments by driving efficiency, transparency, and innovation.»

She also highlights the growing attention of regulators and policymakers to the transformative power of open banking payments, emphasizing its contribution to financial inclusivity.

Laurent Van Huffel, SVP of Financial Services at Axway, an API management and integration software company, sees 2024 as a promising year for open banking. Van Huffel notes that consumer trust in open banking and API technologies is on the rise.

He states, «What bodes well for 2024 is that many consumers are comfortable with sharing their data if it means valuable services and a better experience.» He mentions the proposed personal financial data rights rule in the US as a significant development that will boost open banking, particularly by moving away from screen-scraping toward open APIs.

Van Huffel believes this rule will level the playing field and create opportunities for smaller banks and credit unions to retain and attract customers, especially among the younger generation.

Hannah Fitzsimons, CEO of digital payments fintech Cashflows, predicts that open banking will enter a new phase of maturity in early 2024. She highlights the completion of the open banking implementation roadmap over the past year as a key factor.

Fitzsimons states, «While B2B adoption may continue at a slower pace, expect to see deeper collaboration between financial institutions and third-party providers, fostering innovation and competition.»

Jenn Markey, Vice President of Payments and Identity at Entrust, an identity, payments, and data security solutions company, discusses open banking regulation in the US. She expects regulation to accelerate but notes the industry’s ambivalence toward it.

Markey explains, «Banks are ambivalent because open banking can potentially threaten direct customer relationships.» She suggests that banks must adapt their identity and security frameworks to handle open APIs and new fintech partnerships, leading to an expansion of the cybersecurity landscape.

In the short term, Markey describes the current state of open banking as the «Wild West» until more comprehensive regulations emerge. However, she emphasizes the potential for secure financial ecosystems and calls for proactive partnerships between banks, regulators, and fintechs.

Jovi Overo, Managing Director, UK at borderless payments company Unlimit, expects further developments in open banking in 2024. He anticipates a strong focus on reducing payment friction in fintech offerings, with a particular emphasis on improving user experiences.

Overo predicts, «Artificial intelligence, which is starting to change the financial services industry, will have three main effects: it will automate complex financial operations for fintech companies, provide personalized services for customers, and advance anomaly and pattern recognition.»

The year 2024 holds promise for open banking, with growing adoption, increased consumer trust, and evolving regulations. The industry is poised for innovation, competition, and greater financial accessibility, offering opportunities for businesses, consumers, and governments alike.