FinTech Magazine's 2024 lookahead: Open banking

As we look ahead to 2024, FinTech Magazine has gathered insight and expertise from dozens of leaders representing companies operating right across the financial services spectrum. 

In this instalment, the focus is on the future of open banking. 

Devashish Mishra, Head of Solutions – Europe at Persistent Systems

We’ll see a boom in open banking in 2024 when wider industries start implementing it – it’s not just down to banks. Big players like Apple and Amazon have realised its potential and embedded their own payment solutions using open banking frameworks. But it will go beyond this once we see more organisations applying open banking frameworks from loyalty, embedded insurance to credit solutions, and even apply it for logistics and manufacturing transactions. 

Over the coming year, we’ll see a pickup of embedded insurance. Now it is merely an added option, but going forward it will be plugged into any commerce interaction we make.

Alan Irwin, VP, Products & Solutions, Europe at Global Payments

2023 has been a huge year for open banking adoption, surging 68.2% from the previous year to hit 4.2 million users in the UK in July. Open banking enables consumers to provide third-party providers (TPPs) with secure access to their payments account, meaning that payments can be made through these TTPs directly from their payments account and without the need for cards.

With more people using open banking for payments, in 2024 consumer expectations of open banking are likely to increase dramatically. Consumers will demand higher levels of speed, convenience and security around open banking as a payment method. As a result, there will be a renewed focus on the availability and performance of APIs and user interfaces. Without improving these features, TTPs will see growth in open banking payments stagnate and even struggle to compete with digital wallets and standard cards.

2024 will also see a stronger emphasis placed on consumer protection from fraud and scammers. With US$303 million lost to authorised push payments (APP) fraud in the first six months of 2023, according to UK Finance, security is front of mind for businesses and their customer bases. A key differentiator for open banking and card payments is the liability protection offered by cards through the disputes and chargeback processes. Merchants and consumers alike want the power to protect themselves with tools and processes to limit financial exposure. As such, to grow in the coming year, TTPs will need to develop and implement enhanced risk and fraud prevention tools to help drive confidence in the payment channel and mitigate concerns around exposure.

Hannah Fitzsimons, CEO at Cashflows

As companies diversify strategies to adapt to the economic climate, innovation in the industry will continue to thrive as companies adapt and evolve. In fact, in early 2024, I predict we will see open banking enter a new phase of maturity. 

With the open banking implementation roadmap being largely completed over the last 12 months, the landscape is ready for consumer-focused applications to take off.

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.

Dr. Shlomit Wagman, Chief Regulation and Compliance Officer at Rapyd

In the coming year, we can anticipate a further shift from traditional financing to fintech and fast payments, with an increased reliance on open banking and transfers. 

Concurrently, regulatory frameworks, including privacy and consumer protection, will need to undergo an additional rapid development to support consumers and ensure the robust growth of the industry. 

Despite the growing adoption of fintech services, there seems to be a limited understanding of the associated risks of money laundering and terrorism financing.

The Financial Action Task Force (FATF), the inter-governmental organisation setting global standards on money laundering and terrorism financing, should intensify its scrutiny of the fintech and payments industry.

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