- Open banking in the United States will grow from $7.08 trillion in 2021 to $35.79 trillion by 2031, driven by the demand for personalized services and the use of secure APIs.
- The decentralized regulatory structure and the shortage of API experts are slowing down adoption, while large banks and fintechs work together to create a more collaborative ecosystem.
Open Banking in the United States: A Transformative Shift in the Financial Ecosystem
Open banking in the United States is undergoing a significant transformation, positioning itself as a key sector within the global financial ecosystem. This model, which allows consumers and businesses to securely share their financial data with third parties, could reach a market value of $35.79 trillion by 2031, up from $7.08 trillion in 2021, according to the Transatlantic Index USA, published by Open Banking Excellence (OBE).
Open banking in the United States: growth projections driven by innovation and demand
The report from the Transatlantic Index USA, combining qualitative and quantitative research supported by the University of Oxford, states that this exponential growth is due to factors such as:
- Demand for personalized financial services: Consumers are seeking solutions tailored to their specific needs, pushing institutions to adopt innovative technologies.
- Transition to API-based systems: Secure APIs are replacing traditional “screen scraping,” marking a shift toward more reliable and efficient standards.
This progress is also supported by regulations such as Section 1033 of the Dodd-Frank Act, which guarantees consumers’ right to access and share their financial data securely. The implementation of this law strengthens trust in open banking in the U.S., promoting competition and innovation in the sector.
Structural and regulatory challenges ahead
Despite the positive projections, open banking in the U.S. faces several challenges that could slow down its adoption:
- Decentralized regulatory structure: Unlike Europe, where the regulatory framework is more unified, the U.S. has a fragmented system that makes it difficult to create a cohesive environment.
- Resistance from traditional institutions: Some of the largest banks have requested extensions to comply with the Section 1033 rules, arguing that the initial time frame was insufficient.
- Shortage of API experts: The demand for consultants and API development specialists could outpace the available supply, creating bottlenecks in the implementation of new technologies.
John Pitts, Head of Policy at Plaid, highlights that “large banks already equipped with APIs have expressed concerns about their ability to meet the established deadlines.” This underscores the need for a more collaborative approach between banks and fintechs.
This is evident in efforts from other institutions, such as a study conducted by Visa, which indicates that 87% of Americans have linked their bank accounts to third-party companies, although only 34% understand how this process works.
Open Banking Tracker, a consultancy, provides data on the implementation of open banking in the U.S., reporting that 182 banks and providers have adopted this model, with a total of 36 banking APIs available.
A competitive and collaborative landscape
Despite the challenges, open banking in the U.S. is fostering a more collaborative ecosystem. Large banks like JPMorgan and fintechs like Plaid are already working together to integrate financial data solutions. This dual approach, where institutions act as both data sources and recipients, is smoothing traditional adversarial relationships.
Moreover, the OBE report reveals that 90% of international executives are considering expanding into the U.S. market due to new regulations. This reflects the growing global interest in this sector.
The current state of Open Banking in the United States
Today, nearly 100 million Americans use “screen scraping” as a method to access financial data. However, the shift toward API-based systems promises an era of greater innovation and security.
The report highlights that the implementation of Section 1033 in 2024 will mark a milestone, consolidating open banking in the U.S. as a pillar for financial inclusion and market growth. With collaborations between entities and a more robust regulatory framework, the future of this financial model looks promising.
However, full regulatory compliance is expected to take up to two more years to finalize.