Why Banks Can Lead — and Win — the Open Banking Revolution
As the acceptance of open banking accelerates, banks and other financial institutions can leverage longstanding trust among consumers for competitive advantage, according to a new report.
By David Evans, Chief Content Officer
The report: Open Banking: The Trust Imperative
Source: MasterCard
Why we picked this report: The prevalence and penetration of open banking services will continue to advance in 2025 and beyond, driven by its deployment by non-FI players and the proliferation of "all-in-one" apps. Understanding the evolving opportunities for banks and credit unions in this emerging ecosystem will be critical to future growth.
Executive Summary
As the open banking revolution has experiencing rapid growth across major markets, trust is emerging as the critical factor for continued expansion.
According to a new Mastercard and Harris Poll survey conducted in the U.S., U.K., Nordic, and Australian markets, 85% of businesses currently use open banking services, while 76% of consumers connect their financial accounts to third-party tools. Yet, while convenience and efficiency drive adoption, with 93% of businesses reporting improved financial transactions, security concerns remain paramount. The research reveals that 93% of businesses prioritize data security, and 86% of consumers will abandon transactions not verified by trusted brands.
For the ecosystem to flourish, financial institutions must focus on building trust through robust security measures, transparent data practices, and consent-based sharing models, while delivering the enhanced, personalized experiences that users demand.
Key Takeaways
- Open banking adoption is accelerating rapidly, with 93% of businesses expecting industry momentum to increase in the next five years, and 92% viewing it as essential for future-proofing their organizations.
- Payments have emerged as the dominant use case, with online checkout, credit card balance payments, and account transfers leading B2B applications, while money transfers and bill payments lead consumer usage.
- Security concerns represent the primary barrier to wider adoption, with 33% of consumers worried about data breaches and 27% concerned about sharing personal information.
- Trust is the top motivator for choosing open banking partners, with established banks and credit card companies being the most trusted providers (66% and 56% respectively for consumer trust).
The Rise of Open Banking
The open banking ecosystem has reached a critical mass, transforming from an emerging technology into a fundamental component of modern financial services. Survey data shows overwhelming adoption, with 85% of businesses already utilizing open banking solutions and 76% of consumers actively connecting their accounts to third-party services.
This rapid growth is driven by a strong appetite for improved digital financial experiences. The technology’s appeal lies in its ability to streamline operations, enhance decision-making, and deliver improved customer experiences, making it a crucial tool for future business success.
Particularly noteworthy is the broad acceptance across different markets, with adoption rates reaching 92% in Nordic countries, 89% in Australia, and 86% in the United States. This widespread adoption reflects a fundamental shift in how financial institutions approach customer service and operational efficiency. The research indicates that businesses implementing open banking solutions are seeing tangible benefits, with 64% reporting improved profitability and 63% noting positive revenue impacts. These results demonstrate that open banking is not just a technological innovation but a strategic imperative for financial institutions looking to remain competitive in an increasingly digital marketplace.
The momentum is further reinforced by changing consumer expectations, with 73% of respondents actively seeking more convenient financial experiences. Today’s digital consumers demand control over their finances, seamless payments, instant account opening, and rapid loan approvals. Open banking provides the technological framework to meet these expectations, enabling financial institutions to deliver the personalized, efficient services that modern customers demand.
Security and Trust: The Foundation for Growth
While adoption continues to surge, security concerns remain the primary barrier to wider implementation. The research reveals that 93% of businesses prioritize data security, and 94% of consumers consider their bank’s ability to protect financial information crucial. For the ecosystem to thrive, providers must implement robust security measures, including data encryption, multifactor authentication, and regular security audits. The research shows that trust is the top motivator for choosing open banking partners, with established financial institutions enjoying the highest levels of consumer confidence.
The importance of security extends beyond mere data protection. The survey reveals that more than 80% of consumers will walk away from online transactions not verified by trusted brands, highlighting the direct relationship between security confidence and business success. Financial institutions must balance the drive for innovation with the fundamental need for robust security measures. This includes implementing comprehensive security frameworks that protect not just data, but also the entire transaction ecosystem.
Trust building requires a multi-faceted approach. Beyond technical security measures, institutions must focus on transparency and user control. The research indicates that 58% of consumers would share their data with trusted organizations for more personalized experiences, but they want clear control over how their information is used. Successful open banking implementations must therefore include robust consent management systems, clear data usage policies, and simple opt-out mechanisms.
Read more about open banking trends:
- Has CFPB Started a War Over Open Banking — or Created New Opportunities for Banks?
- The Future of Lending Is Up To the Innovators Who Personalize
- How CFPB 1033 Charts the Future of Open Banking
Evolving Use Cases and Future Opportunities
Open banking applications are expanding beyond basic account connectivity. The most popular current use cases focus on payments and transfers, with online checkout and credit card balance payments leading B2B applications. For consumers, money transfers and bill payments dominate usage, with younger generations showing particularly strong adoption rates. Gen Z leads with 82% using open banking for bill payments, followed closely by Millennials (82%) and Gen X (81%). Looking ahead, businesses express strong interest in more sophisticated applications – 87% plan to implement recurring payments, while 86% aim to integrate invoice processing.
The evolution of open banking use cases reflects a maturing ecosystem where participants are increasingly comfortable with more complex financial interactions. Beyond basic payment functions, financial institutions are exploring advanced applications in lending, credit decisioning, and financial management. More than four-fifths of businesses indicate plans to use open banking data insights for financial management and business lending decisions, suggesting a shift toward more sophisticated, data-driven decision-making processes.
Consumer appetite for advanced services is equally strong. The research shows growing interest in personalized financial management tools, with consumers particularly interested in services that can optimize their personal finances and provide tailored financial advice. This demand for personalization represents a significant opportunity for financial institutions to deepen customer relationships and create new revenue streams.
The generational adoption patterns revealed in the study are particularly telling for future growth opportunities. While Gen Z leads in adoption, the strong usage rates among Gen X and even Baby Boomers (71% for bill payments) suggest that open banking is becoming mainstream across age groups. This broad demographic acceptance indicates that financial institutions should develop comprehensive open banking strategies that cater to various user segments, rather than focusing solely on younger, tech-savvy customers.
Looking forward, the research suggests that open banking will increasingly integrate with other emerging financial technologies. Businesses are exploring combinations of open banking with artificial intelligence for improved risk assessment, blockchain for enhanced security, and real-time payment systems for instant settlement. This convergence of technologies promises to create even more innovative financial services and business models.
The success of these future opportunities will depend heavily on how well financial institutions can maintain the delicate balance between innovation and trust. As the ecosystem evolves, institutions must continue to prioritize security and transparency while pushing the boundaries of what’s possible with open banking technology. Those that can successfully navigate this balance while delivering meaningful value to customers will be best positioned to capture the growing opportunities in the open-banking landscape.