Global state of open finance 2023


Open finance is now a new paradigm in the financial industry. It has evolved in the past decade from open banking to new revenue models such as BaaS and BNPL(Figure 1).

Figure 1 : Banks and FIs explored new revenue models in the last decade through open finance

It is kickstarting an ecosystem of digital innovation integrated along customer journeys offering a more inclusive, transparent, and secure financial system. Its true value lies in making the everyday life of the consumer easy and frictionless.

The growth of open finance presents a significant opportunity for companies to create new revenue streams and improve customer experiences. As the industry continues to evolve and mature, it is important to continue monitoring its growth and potential impact. As of now, we can see that embedded finance is turning to be USD 7.2 trillion-dollar growth opportunity by 2030 across the globe(Figure 2)

Figure 2: Open finance creates a trillion-dollar growth opportunity

There is an opportunity for open finance to become globally ubiquitous and democratize access to financial services. Every country is at a different stage of open finance adoption and maturity.

Figure 3: Open finance drives a worldwide sentiment of growth opportunities

State of open finance 2023 provides a perspective on the total addressable opportunity, potential economic impact, and critical success factors to assist in developing market estimates for top banks, fintechs and technology platforms for their growth.

Demystifying open finance

Open finance enables seamless connections between banks and third-party service providers through Application Programming Interfaces (APIs) to effectively build, operate, and deliver products and services that serve customer needs.

The global growth of open finance has resulted in three different outcomes:

  • BaaS-
  1. This allows the banks to convert their products and services into plug and play solutions and enable white label banking (private label banking) for third parties.
  2. Opportunity for license holders to become providers of white label and co-branded products and services
  • Embedded finance-
  1. It helps banks to cross sell products and services by facilitating seamless integration of financial services into other consumer facing digital platforms.
  2. Embedded experience gives rise to journey led transactions that support all aspects of customers’ daily lives and their point of need
  • Data monetisation-
  1. It is also a data sharing mechanism between banks and third-party service providers that allows secure financial data access from the bank’s ecosystem via APIs.
  2. Business models include providing raw data as a service, actionable insights generated from data or supporting outcomes, such as KYC, fraud management, and other innovative services

Drivers of open finance

The growth of open finance is dependent on various factors, but these 3 factors play a key role:

  1. There has been a decline in net interest margins and interest income has stagnated. This has led the banks to investigate opportunities of growing fee-based income through open finance
  1. Banks have access to vast amount of customer data which they are leveraging by repurposing it to bring innovation in products and services
  1. As consumers demand more flexible, personalized, and accessible financial services, traditional banks embraced open finance to overcome the pressure of staying ahead of the curve.

The growth of open finance is being driven by several key factors, as can be seen in the figure below:

Figure 4: Drivers of open finance

The rise of integrated experiences has further made open finance a necessity to enable growth as more and more customers shift towards digital. Customers’ expectations go beyond banking. For example: Bank of America provides treasury-as-a-service for small businesses to help them manage their treasury. This is allowing open finance to create new business models and revenue streams for companies across a range of industries;

open finance
Figure 5: Open finance opportunities beyond banking

twimbit’s global open finance maturity index

We evaluated 32 countries that are disrupting the market with open finance systems. These countries are developing customer first solutions and making banking invisible by embedding financial and non-financial services from adjacent third-party ecosystems.

The Index maps the relative position of the leading countries across two main criteria:

  1. Regulatory initiatives: We evaluated countries based on their government and regulatory body led policies, guidelines, and laws that govern and promote open finance activities. We considered the following five parameters in our evaluation:
    1. Open finance regulatory policy
    2. Governance framework
    3. Regulator defined use cases
    4. Open finance regulatory sandbox
    5. Data sharing compliance framework
  2. Market initiatives: The factors that we looked for evaluation included innovations, integrations, and monetization actions taken by major banks, neobanks, and fintechs in each country:
    1. BaaS-
      1. API network (platforms, portals, number of APIs, delivery maturity)
      2. API products and service portfolios
      3. Reduced cost to serve
    2. Embedded finance-
      1. Portfolio of marketplaces
      2. Revenue growth through marketplaces
      3. External partnerships with third parties, fintechs, and technology partners
    3. Data monetization-
      1. Adopt new revenue models with the provision of data as a service
      2. Provide insights based on raw data to merchants and other partners
      3. Deliver improved outcomes by leveraging data

Based on our research, we have placed each country’s open finance maturity in four categories:

  1. Champions: These countries have exemplary ratings in regulatory initiatives and market maturity
  2. Enthusiasts: For these countries, market maturity is high and regulatory initiatives are still at a nascent stage
  3. Intermediaries: The countries in this category are mid paced in terms of both regulatory initiatives and market maturity
  4. Crawlers: These are the countries where we found that entry level regulatory initiatives and market maturity are yet to be achieved
Figure 6: twimbit’s global open finance maturity index

We observed that almost 50% of the countries that we evaluated came out to be champions in terms of both regulatory and market initiatives.

  • Regulatory initiatives – champions

Let us further discuss the regulatory initiatives taken by each of the champions:

  1. United Kingdom- The country has comprehensive open finance policies and frameworks as part of its Smart Data initiative, along with top notch regulatory sandbox testing mechanisms. It has also implemented amended Electronic Money, Payment Services and Payment Systems (EPPRs) post EU exit to strengthen its data sharing directive.
  2. Brazil- It has crystalized open banking policies to allow neobanks, fintechs, and foreign players to grow in the country. It introduced open finance in 4 phases, currently in the final stage which allows customers to provide consent to data sharing to third party providers
  3. Poland, Germany, Lithuania, and Nordic countries have established open finance frameworks for localized growth. For example, Project 27 will establish a single pan Nordic payments platform, while the European Payment Council’s SEPA (Single Euro Payments Area) Instant Credit Transfer (SCT Inst) creates a request to pay service, API open gateway, and API focused architecture for e invoicing, supply chain finance, and trade finance.
  4. South Korea’s MyData initiative outlines standard data sharing mechanisms, which include regulator defined use cases in accounts, payments, and lending.
  5. Australia has detailed policies Consumer Data Rights (CDR) and is in Phase 2 of adopting open finance in the region. The government is considering expanding the CDR on creating regulatory testing platforms and governance mechanisms.
  6. Singapore’s open finance policy framework is led by market growth. As a mature testbed for other countries to emulate, its regulatory bodies provide prescriptive frameworks for thriving ecosystems. The country’s top three banks are capitalizing on the open banking policy to introduce new business models for growth.
  7. India is at the forefront of the open banking ecosystem with the implementation of the Aadhar national ID database (which makes authentication easier) and the Reserve Bank of India’s Innovation Hub that actively promotes open banking initiatives. The country has become a benchmark for open banking deployment due to active government and private sector support and the API preparedness of banks.
  8. Japan’s Banking Act sets out thorough open banking policies. It is modernizing the API architecture by developing a common API gateway.
  • Market initiatives – champions
  1. BaaS
  1. Westpac rolled out 3,200 APIs in Australia
  2. United Kingdom reports among the highest YoY growth in 2021 for API products annually, at 27%, and the largest number of products by category
  3. Solaris earned a gross revenue of nearly USD9.9 million through its BaaS product suite in 2021
  1. Embedded finance
  1. Singapore, India, the United Kingdom, and Australia embed finance use cases across payments, lending, insurance, SME finance, e invoicing, and wealth management
  2. DBS Property Marketplace generated USD700 million generated in Singapore
  3. India has the largest consumer electronics, digital products, and lifestyle payments and lending marketplaces
  1. Data monetization
  1. Australia has 10% BNPL e commerce penetration, the highest in the world
  2. More than 36 neobanks are built on co-branded licenses in India
  3. Banks acquire, on average, 100,000 to 1 million active new customers annually
  • Regulatory initiatives – enthusiasts


  1. USA plans to institute a new legal system after multiple years of driving market-led open banking activities. The US CFPB (Consumer Financial Protection Bureau) will establish a new legal framework for data transfer and compliance by the end of 2022.
  2. The Financial Data Exchange (FDX) has also rolled out the API License agreement to govern access of FDX API for application creation and delivery.
  3. The Federal Reserve is on the path to launch a competitive payment gateway, FedNow , in mid 2023.


  1. China introduced its second-generation Internet Banking Payment System (IBPS) to support P2P, P2B payments; however, it does not have an open API interface.
  2. China’s Central Bank Digital Currency (CBDC), digital yuan, in the pilot testing phase. The central bank has yet to announce the nationwide rollout of the digital currency.
  3. Open finance initiatives are led by market growth rather than regulatory growth, regulators are now restructuring the fintech industry to establish standard policies


  1. PSD2 and Open Banking Europe provide Italy’s fintech ecosystem the opportunity to penetrate certain areas preserved for the big banks in the country.
  2. Italy has regulator defined use cases in accounts and payments.
  3. Italy has also adopted the SCT Inst real time payment scheme through RT1 and TIPS (Target instant payment settlement).
  4. This allows banks to enable instant payment services through API services and facilitated by domestic clearinghouses.


  1. Indonesia’s central bank, Bank Indonesia (BI), has issued the Indonesia Payment Systems Open Banking Blueprint (IPS 2025) to cater to the country’s growing digitalization needs.
  2. BI SNAP (National Open API Payment Standard) has provided the open API implementation standards for all financial institutions in the country.
  3. BI launched the BI FAST (Fast Payment System) for a pan country frictionless payment in December 2021 in accordance with Initiative 2 of the IPS 2025.
  • Market initiatives – enthusiasts
  1. Italian banks have invested more than USD1.17 million in promoting Europe’s development of commercial open banking services, increasing from 22% in 2019 to 27% in 2021.
  2. Digital/mobile wallets in the United States account for 30% of e commerce payments on par with credit cards.
  3. Tesla embeds insurance services into the purchase of its cars, generating more revenue through product and insurance sales.
  4. PayPal estimates 300 million customers utilize cryptocurrencies and buy from the platform’s merchants without exposing sellers to currency risk. Venmo and Square Cash Apps allow users to buy and/or sell crypto.
  5. Alibaba’s online grocery stores and food delivery units accept digital currency as part of China’s expanding digital yuan pilot program.
  • Champions vs Enthusiasts
Figure 7: A comparison of Champions and Enthusiasts

8 imperatives of success

  1. IT modernization: Legacy infrastructures create multiple dependencies and delay the execution of projects. An API-led approach enables more hybrid integration and reduces the risks associated with ongoing transformation. APIs (Application Programming Interfaces) focus on efficiency gains by breaking down workloads into smaller projects. It works on shared resources and libraries, increasing the speed of innovation.
  1. Developer platforms and sandboxes: Industry players must future-proof products and services in a simulator environment, i.e., identical to real-world scenarios, by testing end-to-end customer journeys and seeking practical guidance for improvement. Most countries in the Champions category have regulator-driven sandboxes that provide a controlled environment to test new ideas and concepts before going live. This approach identifies any anomalies, risks, and conflicts of interest before exposing the product to the public.
  1. API architecture and lifecycle management: Each layer in the API management architecture carries its own set of stakeholders and costs. Building an API architecture involves more than just developing functional APIs. It is about developing a plan to resolve stakeholder concerns and constructing reliable infrastructure to support new digital platforms. Banks need to have API-led information architecture to support secure data access models, outline the scope of use, and ensure authorization throughout the product and service lifecycle. Banks can also refer and adopt standard country-specific API frameworks to build an efficient approach rather than creating APIs from scratch. For e.g., Data Standards Catalogue and Cross Government UK (United Kingdom) API Catalogue. A robust, resilient approach to API management is necessary to withstand both immediate and long-term volatilities and open new revenue streams and market opportunities.
  1. Revenue sharing models: To deliver better customer propositions, the new wave of digital only players increasingly unbundle products into micro-products or services or rebundle offerings with components from other providers. The ability to reinvent and “package” attractive propositions centered on the needs and preferences of customers will drive future growth. Banks need to create revenue sharing models that clearly define the distribution scope and customer relationship, reducing the cost of new customer acquisition and pressure on interest incomes
  1. Partner ecosystems: Banks must develop ecosystem strategies that equip them with speed, size, and unique offerings to compete in the digital sphere. This will help them build stronger customer relationships and earn a higher wallet share. Digital ecosystems enable banks to become more efficient by giving them access to innovative capabilities that would otherwise be prohibitively expensive to develop or operate on their own.
  1. Security: Open finance raises serious concerns about consumers’ financial privacy and financial security. Customers’ account information could be vulnerable to malicious third-party apps, data breaches, fraud, hacking, and insider threats. Banks must implement a robust application security strategy for 360-degree protection of customer data that goes beyond testing for software vulnerabilities and provides secure customer experience.
  1. Data strategy: Sharing data with other financial institutions as a data provider may not be a viable growth strategy in the open finance era. This poses significant churn risk as customers can simply switch services based on the value they provide. To ensure robust progression in open finance evolution, banks must implement a holistic data and analytics strategy as a catalyst in delivering more contextual and connected customer experiences instead of just placing it as an aspect of its API strategy
  1. Data monetization: Banks are custodians of massive amounts of customer data and have an invaluable opportunity to build customized value propositions for their customers. They can utilize the data to generate insights on customer behavior and understand how macroeconomic factors impact saving and spending patterns in creating hyper personalized value propositions. Third-party providers benefit significantly from using this quantum of customer data and combining it with datasets such as social media interactions, digital IDs, and geographical data to develop compelling customer solutions.

Know more about open finance solutions by F5 here: F5 Global state of open finance 2023