As we look ahead to 2024, FinTech Magazine has gathered insights and predictions from industry leaders regarding the future of open banking. Here are the key points from the article:
- Open banking will see a boom in 2024 as wider industries, beyond just banks, start implementing it. Big players like Apple and Amazon have already embedded their own payment solutions using open banking frameworks. Other industries, such as loyalty, embedded insurance, credit solutions, logistics, and manufacturing, will also adopt open banking frameworks.
- In 2023, open banking adoption surged by 68.2% from the previous year in the UK, reaching 4.2 million users. Open banking allows consumers to provide third-party providers (TPPs) with secure access to their payments account.
- Consumer expectations of open banking as a payment method will increase in 2024. Consumers will demand higher levels of speed, convenience, and security, leading to a focus on the availability and performance of APIs and user interfaces.
- Consumer protection from fraud and scammers will be a priority in 2024. TTPs will need to develop and implement enhanced risk and fraud prevention tools to drive confidence in the payment channel and mitigate concerns around exposure.
- In 2024, open banking will enter a new phase of maturity, with consumer-focused applications taking off. Collaboration between financial institutions and third-party providers will foster innovation and competition.
- In the coming year, there will be a further shift from traditional financing to fintech and fast payments, with increased reliance on open banking and transfers. Regulatory frameworks, including privacy and consumer protection, will need to develop rapidly to support consumers and ensure industry growth.
- The Financial Action Task Force (FATF) should intensify its scrutiny of the fintech and payments industry to address risks of money laundering and terrorism financing.
In summary, open banking is set to experience significant growth and adoption in 2024, extending beyond the banking sector. Consumer expectations for speed, convenience, and security will drive the focus on API and UI performance. Consumer protection from fraud will be a key priority, and collaboration between financial institutions and third-party providers will foster innovation. Regulatory frameworks will need to support industry growth and address risks associated with fintech and payments.
