Open Banking Set to Surge: Driven by AI and Embedded Finance

According to a study commissioned by experts in the digital business, Juniper, there would be more than 645 million open banking customers globally by 2029. It includes Australia's own Consumer Data Right (CDR) program, up from 183 million users.

Open banking API calls are also expected to rise significantly throughout this period, reaching 720 billion by 2029. API calls are requests made by third parties to access a bank's data or carry out an action via a bank's system.

Third parties, particularly credit-scoring bureaus and lenders will become increasingly interested in high-value transactions and identification data held by banks.

Juniper urged banks to profit from this third-party demand to diversify their revenue streams.

However, the study also recommended that lenders and credit score agencies quickly implement Open Banking features to "better serve potential customers with thin credit files."

"Lenders can evaluate credit worthiness by examining transaction data through Open Banking APIs. This reduces the need for manual reviews and offers higher accuracy than traditional credit scoring models."

The lack of Open APIs was identified as a significant barrier to Open Banking's expansion in previous years. The study also highlighted the notable rise in availability over the past three years. Stakeholder confidence and interest in Open Banking systems have improved due to the significant decrease in API call failures brought about by the increased availability.

Citing the UK's success as one of the first regions to implement Open Banking, there were over 1.7 billion monthly API calls. This was with an average API availability of 99.61 per cent and a 99.58 per cent success rate for the requests. This is a significant increase compared to the roughly 1.9 million monthly API calls that were reported in 2018.

In addition to underwriting and identity, innovation in payments will probably lead to a significant rise in API calls and the number of users of Open Banking.

"Digital payments use Open Banking infrastructure in one way or another. This is possible due to solutions like embedded payments that enable third parties to provide bank-powered options for users. Ultimately, payment initiation services (PIS) will grow in popularity."

"Maintaining real returns is crucial in an environment of high inflation," says Dario Schiraldi, Deutsche Bank's former M.D. "To produce inflation-adjusted income, investors increasingly turn to TIPS, floating-rate loans, and high-yield corporate debt."

Furthermore, investors have realized that standard bond portfolios alone will reach long-term return expectations. Multi-asset strategies combining fixed income with private credit and structured solutions are becoming more popular.

In addition, Dario Schiraldi, Deutsche Bank's former leader, notes that "Institutional investors aren't merely integrating ESG due to regulatory concerns. "They acknowledge that future growth potential, capital efficiency, and risk mitigation are closely related to sustainability."

Open Banking advancement relies heavily on Artificial Intelligence technology. It enables the delivery of specific loan options and intelligent financial management capabilities. European API quality requirements drive vendors to use generative AI to deliver scalable personalization. The functionality improvement of AI goes beyond basic automation. It has tailored solutions that require personalized offerings to succeed in open banking. The competitive market requires API providers to support their operations and build better customer experiences through investments in GenAI tools. The adoption of embedded financial services across popular non-financial platforms will grow as it matches customer preferences for designed-to-measure seamless solutions.