What does the future of open banking look like?

The UK is the current front runner in open banking deployment, but the future for this disruptive technology is still unclear. Predicting the future is always tricky, but there’s already a call for other sectors to follow suit.

Open banking now operates in a fully regulated environment that could revolutionise how we own and use our financial data. As consistent and secure digital identities continue to build trust, what might the future of open banking look like?

What forces are shaping the future?

As the traditional banking model is disrupted, four key factors are shaping how open banking will develop:

This paradigm shift from a closed banking ecosystem to an open one populated by aggregators, payment providers, customers and service partners is designed to add value and encourage the development of new business models.

Four potential scenarios for the future

If we accept that predicting the future of open banking is virtually impossible, how are SMEs to strategically plan for the changes in the market? These are four of the potential end states, from the status quo to the diversification of the market and its impact on banking value drivers.

1. Status quo

In the status quo scenario, uptake of open banking remains low and there’s virtually no impact on the banking value chain. Open banking products remain a niche market. The value propositions on offer do not persuade customers and open banking struggles to take hold.

But if open banking successfully challenges the status quo, these are other potential outcomes:

2. Tech giant domination

3. Traditional banking dominance

4. Financial services revolution


Traditional banks see tech giants as the real disruptors in this fast-changing sector, but there are challenges for all players:

The future may lie in the development of strong partnerships between traditional banks and FinTech startups delivering the innovative products and services SMEs need while leveraging the security and trust of the traditional model.

The future is now

What’s really exciting about open banking for the SME sector is the potential to close the gap between what traditional banks offer, and what SMEs want from their bank. 

Innovative FinTech is already unlocking a feature where tools for seamless payments, proactive lending and better financial management satisfies the unmet needs of business customers.

Better account aggregation

If your SME uses multiple accounts, open banking aggregation puts cash flow and debt management at your fingertips. 

Actionable insights

Smart, SME optimised insights based on a real-time overview of your spending patterns and financial position.

Financial advice

Open banking could lead your SME to specialised financial advice that delivers cost-effective solutions including funding strategies, expense management and loans.

The FinTech app store

Imagine a version of the App Store populated with financial services apps that could meet even the most niche of requirements. Tech giants are experimenting with a similar approach, encouraging third-party developers to create financial service apps that meet the needs of SMEs.

A fundamental change

According to recent research, 39% of banking customers would share their financial data with third parties if it resulted in access to the kind of enriched financial services offered by open banking.

The future looks to be diverse and modular with new players in the open banking ecosystem delivering better business banking and a wealth of financial options for SMEs.

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