PSD2 and Open Banking Market Size, Share, Growth, and Industry Analysis, By Type (API Platforms, Payment Initiation Services, Account Information Services), By Application (Financial Institutions, FinTech Startups, Digital Banking Solutions), and Regional Insights and Forecast to 2034

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PSD2 AND OPEN BANKING MARKET OVERVIEW

The global PSD2 and Open Banking market size was USD 25.14 billion in 2025 and is projected to touch USD 186.98 billion by 2034, exhibiting a CAGR of 27.1% during the forecast period.

The PSD2 and open banking market is undergoing a big growth stage since the banks and fintech are trying to fit in the changes of the regulations regarding payments and ever-changing consumer needs. These frameworks have changed the landscape of banking drastically since it would require secure sharing of data using APIs, and third parties could create new financial services. The market has evolved to the point where it is no longer a compliance market but also an agent of digital transformation in the financial market. Europe is still leading the adoption since PSD2 requirements become regulative and more than 80 percent of banks in the EU provide completely meeting APIs. Open Banking Implementation Entity UK has been available as an example to other markets which have encouraged the formation of account aggregation sites, payment initiation sites, and tailored financial management sites. The North American region is lagging behind fast, and the Consumer Financial Protection Bureau has suggested similar open banking regulations to speed up competition.

The innovators of Fintech are using these frameworks to develop value-added services into a next level beyond mere compliance. AISPs now provide advanced cash flow analytics to small business, and PISPs are lowering the friction of transactions in online commerce. The emergence of banking-as-a-service patterns has allowed non-financial businesses to integrate financial products within their systems. Fraud in transactions is an issue of great concern and Strong Customer Authentication (SCA) requirements work to lower cases of fraud across transactions. The market has transitioned currently into higher-value APIs that support increased functionality, such as real-time verification of payment and superior data analysis. New applications are credit scoring using cash flow pattern, automatic accounting reconciliation, and personalized financial wellness tools. In the future, there is still room to grow in the market as the idea of open-finance spreads not only to the world of classic banks but also to the investments, pensions, and insurance products. Creation of standardised APIs between jurisdictions will be vital in offering cross-border services and sustaining the pace in the financial innovation.

COVID-19 IMPACT

PSD2 and Open Banking Industry Had a Negative Effect Due to supply chain disruption during COVID-19 Pandemic

PSD2 and Open Banking were also affected by the COVID-19 pandemic in two ways which have created a complex pattern of policy dynamics. Early periods of lockdown in 2020 resulted in major operational disturbances in terms of the significance of the continuity of the business rather than the digital transformation initiatives at the financial institutions. The API implementation schedules of numerous banks have been 6 to 12 months behind to emphasize the need to ensure essential services, and the slowdown has resulted in short-term open banking adoption slow-downs in Europe. Regulatory bodies reacted by delaying the deadlines of the requirements of Strong Customer Authentication (SCA), thus offering long-awaited flexibility amid the crisis.

The pandemic has ended up being a strong force of digital financial services enabling the numerous consumer and business bank behavior being thus transformed. The need to access physical branches and many people being under lockdowns created an enormous peak in the need of the API-driven financial solution. Usage of account aggregation services increased 300 percent as consumers wanted consolidated views of their financial assets, and initiation volumes of payment increased 400 percent as e-commerce became the most important commerce channel. It was an unplanned stress test that confirmed the robustness of the open banking infrastructure and the importance of its crash in sustaining the stability of the financial system in the crisis.

Open banking APIs helped governments in Europe give emergency injections to the economy by enabling the disbursement of government stimulus funds in a more efficient manner, with some countries developing custom portals directly linked to bank accounts through payment initiation services. This practical application presented the possibilities of the framework in non-standard point of view of business purposes. The crisis is also thought to boost the process of cooperation between traditional lenders and fintechs, whereby 72 percent of the financial institutions note that their cooperation has intensified on the ground of the rising digital demand.

LATEST TRENDS

Market Away to Growth on Rise of Fitness Recognition

Health awareness and diet regulations have led to the massive upsurge in the demand of gluten-free and organic products in the PSD2 and Open Banking industry. There is an increasing trend of innovations ready-to-use blends and fortified alternatives and integrating the solution to vegan, plant-based, and fusion foods. Also, sustainable operations and environmentally friendly packaging become two more areas of focus that indicate the increasing environmental awareness of consumers and waste producers.

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PSD2 AND OPEN BANKING MARKET SEGMENTATION

By Type

Based on Type, the global market can be categorized into API Platforms, Payment Initiation Services, Account Information Services

• API Platforms: These facilitate safe exchange of data between the banks and third party providers (TPPs) making it easy to integrate financial services. This is prompted by regulatory requirements (e.g. PSD2) and market demand of real-time banking services. Advanced API security protocols such as OAuth 2.0 and OpenID Connect are playing an important role to guarantee secure data exchange in API platforms. Large banks and fintech companies have been spending much of their resources to create a strong API ecosystem that helps them innovate and enhance experiences of their customers. The increase of Embedded finance and the rise of the Banking-as-a-Service concept (BaaS) only increase the significance of such platforms in the contemporary financial system.

• Payment Initiation Services (PIS): Permits the TPPs to make a direct bank transfer on behalf of the customers, eliminating the conventional network of cards. Development of e-commerce and demand of fast and inexpensive transactions are drivers of growth. PIS solutions have gained considerable popularity in Europe because of PSD2 requirements, which allow making instant payments and least dependence on intermediaries. Through PIS, businesses are using checkout processes to minimize check out fraud and ensure successful payment. It is also influenced by the fact that PIS is being integrated with mobile banking apps and digital wallets and is thus becoming popular with tech-savvy consumers.

• Account Information Services (AIS): Offer combined access to account-related information about customers, including customized financial management tools (with the customer consents). The main ones are the increase of fintech innovation and consumer transparency demands. AIS providers are resorting to AI and machine learning to provide predictive analytics, budgeting suggestions and automated recommendations to help people save money. Policies and regulations such as GDPR and PSD2 support the security and privacy of data thereby instilling trust in its users. It has become apparent that the rising open banking ecosystem globally will make the AIS growth to continue to pick pace especially in the wealth management and the lending sector.

By Application

Based on application, the global market can be categorized into Financial Institutions, FinTech Startups, Digital Banking Solutions

• Financial Institutions: The traditional banks and credit unions are embracing the PSD2 and Open Banking as a way of cooperating with regulations and improving their customer provisions. These institutions use open APIs to offer safe data exchanges, allowing third-party integrations to offer a better service such as loan approval and personal financial advice. A lot of them are now creating elite API packages to make money out of their infrastructure without compromising their security standards. The European market is on the advance front with 90 percent of banks operating PSD2 APIs in 2023.

• FinTech Startups: These privately-backed fintech firms are accelerating fintech innovation in the PSD2 and Open Banking environment through development of next generation applications in payments, lending and personal finance management. Revolut has created a whole business on the back of Open Banking APIs, launching account aggregation and savvy money management tools. Since 2020 more than 15 billion dollars of global investment are observed in the sector, which implies high investor confidence in the Open Banking solutions.

• Digital Banking Solutions: While the neobanks and challenger banks have been true believers of Open Banking principles, they are using them to provide customers with convenient, mobile-first banking experiences. These are solutions which tend to consolidate many financial accounts onto the platforms where users have access to an overview of the entire financial situation. Functionalities such as a direct payment notification, spending analytics, and automated savings styles are becoming phenomena. Recently, a study revealed that Open Banking APIs allow digital banking apps to maintain a retention rate of customers 40 percent higher than those on the traditional banking apps.

MARKET DYNAMICS

Market dynamics include driving and restraining factors, opportunities and challenges stating the market conditions.

Driving Factors

Regulatory Mandates and Digital Transformation to Fire up the Market

PSD2 is now a primary driver for development in Europe's consumer financial services market, forcing open access on their payment systems and account data to third-party providers. This pressure is prompting digital transformation in banking; 78% of banks in Europe now feature compliant APIs in 2023. In addition, the developing emerging consumer demand for seamless financial services integration is the source of PSD2 and Open Banking market growth. Emerging markets other than those in Europe are not lagging, with Brazil and another country having similar open banking schemas in place to stimulate competition: by 2025, the global open banking user base is expected to exceed 130 million, obviously signifying appreciable momentum for API-driven financial services all over the globe.

Fintech Innovation along with the Consumer Demand for Personalization Tend to Expand the Market.

The rise of fintech solutions leveraging Open Banking APIs is creating new opportunities for personalized financial management. Customers increasingly demand real-time access to synchronized financial data and AI-driven insights, and as such; 65% of millennials presently use at least one Open Banking-enabled app. API-based solutions tend to cut approval speeds by as much as 80% in some specific sectors such as wealth management and lending. These early adopters have experienced a 35% increase in conversion rates because of hyper-personalized product recommendations made possible through the integration of machine learning algorithms. Investment from the venture capital phase into open banking startups reached $4.5 billion alone in 2023, proving this is an exciting proposition for the future of continued market confidence.

Restraining Factor

Security Concerns and Implementation Costs to Potentially Hinder Growth in Market

Although this progress has been made, numerous institutions are encountering problems in the implementation of secure Open Banking frameworks. The average cost per mid-sized bank to comply with PSD2 is more than €5 million, and ongoing security investments meant for fraud prevention and data protection continue to be squeezing budgets. High consumer trust remains a huge barrier too, where 42% of all Europeans still do not feel good about sharing financial data with third parties. Even worse is the case for small financial institutions that lack this inner support structure of their larger competitors; with about 60% of community banks falling behind schedule on their API implementations, this turn gets even worse. Those issues have been compounded by recent high-profile security breaches; however, in view of such statistics, it becomes apparent that cases of open banking-related fraud incidents increased by 28% year-on-year.

Embedded Finance and Banking-as-a-Service Model Innovative Market Opportunity Creation

Opportunity

Open Banking combined with embedded finance is expected to generate an opportunity of dollars 50 billion by 2025. Non-financial businesses are rapidly introducing financial services into their platforms. The retail, telecom, and e-commerce industries are at the forefront of this trend. New income streams can be created, complemented by a strong emphasis on customer retention through service value-addition.

Leading examples of this are IKEA and Amazon, which have already begun piloting embedded lending solutions powered by open banking APIs. The BaaS segment is also growing by 45% CAGR. Platform providers like Solarisbank and Railsbank allow any company to become a finance service provider. New use cases emerge that cover a broad spectrum from healthcare to automotive, where seamless payment integration enhances customer experiences.

Challenge of Fra9mentary Standards and Trans-Jurisdiction Compatibility Short, definitely

Challenge

The different markets have differing technical standards which create headaches in interoperability, especially for a multinational provider. In this regard, while the UK and the EU have advanced some way toward making standards, only 30% of Open Banking APIs are entirely compatible across borders. Increased development costs coupled with poor scalability hinder results, especially with fintechs targeting more jurisdictions. Varying authentication protocols mean that companies must rely on multiple technical implementations, forcing some fintechs to allocate as much as 40% greater engineering resources.

Diverging regulations worsen matters; in one sense, Europe mandates open banking, but the U.S. remains market driven. Combined with this, uneven adoption at the global level occurs. Industry groups work on harmonization; however, it still means a few years until full standardization.

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PSD2 AND OPEN BANKING MARKET REGIONAL INSIGHTS

• North America

The United States PSD2 and Open Banking Market is thriving on the back of strong fintech innovation and consumer demand for digital financial services, even if operating in an essentially voluntary open banking framework. The fintech giants and major banks are jointly collaborating to build the standards of APIs, with 68% of larger financial institutions reportedly working to implement open banking solutions. The market is estimated to grow at a CAGR of 24.5% till 2025 due to increased acceptance of embedded finance across e-commerce and health care. The standardization of rules in open banking by the Consumer Financial Protection Bureau (CFPB) in 2024 will further escalate the pace of standardization into possibly mandated data-sharing protocols akin to PSD2. Regional giants-JPMorgan Chase and Bank of America have jointly invested over $2 billion in API infrastructure-while fintech unicorns like Plaid control the connectivity layer with a 75% penetration share among digital finance applications.

• Europe

Europe is the largest area in the PSD2 and Open Banking Market Share, with regulatory imposition constituting over 45% of global adoption. The UK and Germany are taking the lead in regional expansion, with 85% of banks being fully compliant with PSD2. The region is experiencing an explosive growth of fintech, particularly in payment initiation (300% growth since 2020). The EBA's 2023 guidelines have further enhanced the API reliability requirements, ensuring less than 0.1% downtime across the major providers. Scandinavia has the highest consumer adoption rates at 62%, being driven by mobile banking penetration of more than 90%. Opportunities for open banking integration into public sector payments are being created by the ECB's digital euro initiative.

• Asia

Asia Pacific is the fastest-growing region, with Singapore, Australia, and Japan pushing for 62% of regional adoption by progressive open banking policies. The market here is characterized by mobile-first solutions, with super-app integrations pushing consumer adoption rates to 58% among urban populations. China's market is peculiar in that it mixes official banking APIs with private tech platforms like Alipay, which together conduct open banking transactions exceeding USD 50 billion a day. India's Account Aggregator movement has added 1.2 billion accounts since 2022, while Southeast Asia's digital banks are using open APIs to achieve 3x faster customer acquisition than traditional banks. The diverse regulatory approaches in the region gear up for both opportunities and complications for cross-border solutions.

KEY INDUSTRY PLAYERS

PSD2 and Open Banking Innovation Market Leaders

The PSD2 and Open Banking space is characterized by such competitors as forward-thinking financial institutions and agile fintech disruptors that transform the field of financial services with the help of API-driven solutions. Experienced banking-industry giants such as HSBC and Santander have spent in excess of 1 billion dollars combined so as to build up powerful open banking frameworks, with a fuse of regulatory conformity and orchestrated improvement of customer experience using AI-based financial planning apps. The connectivity layer pioneers, including Plaid and Tink, remain at the forefront, where their API offerings have now found their way into over 75 percent of fintech applications in Europe, and large tech companies, including Apple and Google, are beginning to incorporate aspects of open banking into their platforms. Strategic alliances of players in the same industry are on the rise, and the latest collaboration between major banks and fintechs has seen the integration of new services implemented 40 percent quicker. Value-added services have become a major competition area, and in the market leaders compete based on enhanced serviceability, such as real-time cash inflow analysis, automated savings options, and predictive lending models. Cybersecurity is one of the most interesting spheres to invest in, and major providers are planning to invest 25-30 percent of their R&D investments on fraud prevention and data protection technologies as they enter new verticals such as embedded finance and Banking-as-a-Service platforms.

List Of Top Psd2 And Open Banking Companies

• Plaid (U.S.)
• Tink (Sweden)
• TrueLayer (U.K.)
• Yapily (U.K.)
• Finicity (U.S.)
• Token (U.K.)
• Bud (U.K.)
• MX (U.S.)
• Salt Edge (Canada)
• Basiq (Australia)

KEY INDUSTRY DEVELOPMENT

February 2025: In February of 2025, the financial world was marked with a transition of open banking being a disruptive innovation additionally becoming core infrastructure. When JPMorgan Chase announced in 2018 to its surprise that it would open its proprietary application programming interface ecosystem to third-party developers, it was essentially the end of the era of proprietary data in banking. This action was accompanied by the launch of global technical standards in implementation of open banking by the Bank on International Settlements (BIS), the first attempt at unification of open banking implementation across 78 jurisdictions. Early signs indicate the developments have increased the rate of adoption of API to 92 per cent of Tier 1 banks in the world, and the number of API calls per month is over 200 billion transactions. This infrastructure shift is most pronounced in the emerging markets with India Account Aggregator framework and Brazil Open Finance Initiative reporting 300 percent in user gains just within the one quarter i.e Q1 2025.

At the same time, the European Banking Authority (EBA) approved its "Open Banking 2.0" guidelines and set an API-uptime indicator of 99.99% and real-time fraud monitoring did not allow 63 percent of financial crime to occur in pilot projects. Most importantly, perhaps, February also saw the introduction of the first intercontinental open banking transaction anywhere in the world, whereby a consumer in Berlin was able to make immediate payment to a merchant in Singapore through direct bank-to-bank API connectivity at a fraction of the historical point-to-point SWIFT cost. This was made possible by the recent introduction of a new settlement layer on blockchain by a consortium of 40 big banks and this is the biggest challenge so far emerging on the traditional payment networks. Recent forecasts by experts in the industry suggest that come Q4 in 2025, almost two thirds of all digital financial activities around the world will be supported by open banking infrastructure and that this will transform the nature of financial flows across the world.

REPORT COVERAGE

This report is a rigorous SWOT analysis and a future view of the global PSD2 and Open Banking market, a detailed look at the technological, regulatory, and competitive influences driving it through to 2029. It examines main growth catalysts such as fast-moving digital transformation (where 68% of financial institutions considerAPI-first approaches as a priority), the development of regulatory landscapes in 45+ countries, and the increased demand of the consumers towards the embedded finance services. Market segmentation encompasses the most important fields, such as the types of API platforms to enterprise applications with the focus on rapidly developing patterns of activities in wealth management and cross-border payments regarding the BFSI, retail, and government industries.

The report looks at not only existing innovations like artificial intelligence-driven transaction analytics made possible by the 40 percent of large banks and at retrospective turning points like the 2024 PSD3 ratification. Special attention is drawn to the regional adoption trends, where Europe continues to hold the majority of the market with 48 percent market share and the Asia-Pacific with a 32 percent CAGR as it adopts mobile-first implementation. Competitive analysis monitors the traditional banks reaction to the fintech menace with a total of 15 billion invested in open banking infrastructures since 2023.

In spite of such drawbacks as lack of API standardization (impacting the third of all cross-border applications), and resounding security issues, the market will still support its position of ever-increasing growth rates; 24.5 percent being the average. This is a momentum driven by deeper changes in the construction of financial services, with open banking increasingly as the glue holding past systems together and next-generation systems together. The report sees unrealised potential in the SME banking and insurance areas, where API penetration is 18-22 per cent points below retail banking and, therefore, major growth can be expected as SME banking and insurance evolve to be more modernised.