How Open Banking Will Evolve in 2023

How Open Banking Will Evolve in 2023

An outlook on how Open Banking will evolve in 2023 to empower embedded finance and the challenges this will bring.

It has been a long time since Citibank launch edits PFM application in the US, a move which would eventually form the basis for Open Banking as we know it and since the launch of Open APIs in 2019, that adoption has only grown exponentially. According to the Open Banking Limited group, there are millions of regular users of Open Banking in Europe alone and the growth continues.

"Open Banking improves financial decision making for consumers and drives down costs for small and medium sized businesses, boosting competition and innovation” (CMA, January2023)"

Across Europe it’s a similar story with a strong increase in adoption in Germany, the Netherlands and Belgium amongst others. This increase in adoption is not just consumers but businesses benefiting from the rewards of Open Banking, with it reducing the costs, improving financial decision making and boosting competition and innovation.

Right now the OBIE suggests AIS data leads the way in adoption as of today, with 64% of services estimated to be data usage, with 30% in of adoptors utilising payments and 6% using both. Payments are beginning to close the gap with month-on-month growth sitting at around 10%

Open Banking will have been adopted by 60% of the population, the result of a massive surge in payments that increased more than 500% last year. This trend signals an increasing trend for people to embrace Open Banking as a secure and convenient way to make payments. These will be consumers that benefit from more secure payments, businesses benefiting from much lower fees and a wider ecosystem reaping the rewards for boosted competition and innovation.

Industry Analysis

Despite all this uptake and high growth rates, those who are driving adoption can vary based on use case and country. Accounting and Lending use cases drive the most adoption in the UK, but in Germany Account Verification, Ecommerce Payments and PFM drive the adoption.

High growth is likely to continue to come in 2023 from lending, as money tightens being able to leverage Open Banking data to make better lending decisions will become an absolute must. It’s estimated that nearly 70% of lenders will use some form of Open Banking solution by the end of 2023, up from 26% in 2021.
Another area that will see high growth is likely to be Ecommerce. As the industry continues to boom, the need for cheaper, instant and more secure payments will become necessity, not a nice to have, something that Open Banking can easily facilitate. 

Despite all of this, there are still some industries that are lagging behind. In contrast to industries like Ecommerce, industries like Insurance are slow to adopt. Despite obvious benefits like lower payment fees, being able to tailor products and services at scale as well as really getting to know customers, they’re still reluctant and slow to adopt.
It’s not just insurance though, there are plenty of other industries that could either directly benefit or benefit their consumers through the use of Open Banking. Some forms of income verification have suffered where the APIs can’t provide data such as address, limiting the amount of automation that can be offered.


Another key issue that is being seen is around onboarding, compliance, anti-money laundering and similar regulation. Years ago, it used to be the realms of big institutions being fined huge sums, for what seemed like nefarious actions, then it Cryptocurrency firms caught the regulators attention, now as FinTechs become more advanced and offer more complex solutions, they are now operating in an environment that may need more scrutiny and regulatory oversight.

Recently Railsr are the most recent headline to have been made, over failing to satisfy compliance requirements with the regulator. Whether it’s liked or not, this regulation serves a great deal of good and is an absolute necessity to our wider ecosystem, but many smaller FinTechs are either simply not equipped or understand the requirement to fully implement.

Whilst data is deemed low risk by the ECB, compliance for payments is an issue and is only likely to grow as adoption grows in line. This growth means a greater emphasis on the need for continued vetting on payments, where they’re coming from, where they’re going to and everything in between. 

Compliance is also much more than vetting an address or a name, whilst it’s important in a lot of realms, when it comes to handling payments, much more is needed by FinTechs. When utilising payments of any kind it must be a constant ongoing process, not a once and done effort as part of onboarding.

Moving forward

Despite it’s accelerating growth Open Banking still has some teething problems, not so much in the entity itself, but more how it’s now being used, between industries being later to adopt through to compliance issues hitting companies on the other end. 

With payments being the area that drives growth, the need for compliance solutions that can help keep FinTechs on the right side of the regulator only becomes even more necessary and having a partner that can provide data, payments and compliance becomes even more important too. 

About OneLinQ

OneLinQ (powered by Pelican.AI) offers Open Banking Solutions such as AIS Data, Data enrichment and analysis, and PIS payment solutions across Europe. On top of our Open Banking solutions, we provide and extensive and complete compliance suite with document verification, KYC, AML, Transaction screening and much more. Learn all about OneLinQ and get in touch with us.

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