API Banking Market Set to Soar, Expected to Reach US$118.1 Bn by 2030

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London, Dec. 14, 2023 (GLOBE NEWSWIRE) — The API banking market is poised for remarkable growth, projected to surge from US$24.5 Bn in 2022 to an impressive US$118.1 Bn by 2030, exhibiting an extraordinary CAGR of 25.2% during 2023-2030.

As the financial landscape undergoes a digital revolution, the API banking market is not just keeping pace, it is spearheading innovation, fuelled by open banking initiatives, digital transformation, and a relentless focus on customer experience.

The API banking market is experiencing a seismic shift driven by key determinants such as the rise in open banking initiatives, digital transformation, and an unwavering emphasis on customer experience.

Open banking, a catalyst for collaboration and innovation, propels API adoption as traditional banks open data and systems, fostering competition and expanding consumer choices. Digital transformation and customer-centric strategies are steering banks towards API integration for enhanced operational agility and meeting rising expectations for seamless digital services.

Security and compliance will play pivotal roles in this surge of the market in the long run, with API security technologies addressing the growing need for robust measures to protect sensitive financial data. Cloud integration is becoming paramount, leveraging cloud-based platforms for seamless connectivity and data exchange, fostering a responsive and connected banking ecosystem,” explains the company’s analyst.

Banks are increasingly adopting APIs to modernise operations, enhance agility, and provide seamless digital services, elevating customer satisfaction. Collaboration and innovation through open banking initiatives will further propel API adoption, fostering competition and expanding consumer choices.

Technologies like AI, and machine learning are driving operational efficiency, risk management, and personalised customer experiences. These technologies power algorithms to detect anomalies and fraud, offer financial recommendations, and optimize API performance.

Key Research Insights

  • Solutions remain the most sought-after market segment.
  • On-premise deployment continues to be the most preferred mode while cloud-based deployment picks up pace.
  • Large enterprises spearhead adoption of API banking solutions and services.

Insights into Segmentation Analysis

API Banking Sector’s Dominant Evolution

In a transformative era for the financial industry, the API banking market is making monumental strides, with the latest projections indicating a meteoric rise from US$24.5 Bn in 2022 to an anticipated US$118.1 Bn by 2030.

Dominance of Solution Components

With seamless integration, and robust ecosystems, the solutions category of the market takes the helm. At the heart of the API banking revolution lies the dominance of solution components.

API management platforms, authentication tools, and developer support systems collectively steer the market, holding the largest share. These components play a pivotal role in ensuring secure, efficient, and scalable API services. As API adoption grows, the demand for comprehensive solutions encompassing these components continues to drive their market dominance.

Design, Implement, Manage – API Services Propel Market Growth

While solution components hold the fort, it’s the services component that experiences the highest growth rate in the API banking market. Financial institutions increasingly turn to specialized services for designing, implementing, and managing their APIs.

Services such as API consulting, integration, customization, and support are witnessing rapid adoption due to the rising complexity of APIs and heightened regulatory requirements.

On-Premise Dominance Persists Amid Cloud’s Soaring Ascent

The battlefield of deployment modes sees on-premise solutions holding the largest market share, driven by stringent security and data control requirements in the financial sector.

Despite the growing popularity of cloud-based options, on-premise deployment remains a stalwart choice, allowing customisation and control over sensitive data. Simultaneously, cloud deployment experiences the highest growth rate, offering scalability, agility, and cost-effectiveness in the dynamic API banking sector.

Large Enterprises Reign, SMEs Surge Ahead

In the realm of market leadership, large enterprises continue their reign over the API banking sector, leveraging extensive resources and established customer bases. Their ability to invest in comprehensive API solutions and manage complex ecosystems solidifies their position.

However, the tide is turning, with small and medium enterprises (SMEs) experiencing the highest growth rate. Agile and adaptable, SMEs swiftly adopt innovative financial solutions, leveraging APIs to enhance services, reduce operational costs, and expand their digital offerings.

Key Report Highlights

  • Auth, gateways, encryption, tokenization, threat detection, and access controls form the backbone of API security solutions in the banking market.
  • Robust security measures and compliance with regulatory standards, such as PSD2 and GDPR, are crucial for building trust and ensuring data protection.
  • Cloud-based platforms enhance scalability, agility, and cost-effectiveness, simplifying API deployment, management, and updates.
  • AI and ML optimise API performance, enhance cybersecurity, and provide intelligent, secure, and user-friendly banking services.

Insights into Regional Analysis

North America Leads the API Banking Evolution

While North America, and Asia Pacific steal the spotlight as regional powerhouses, the former maintains a dominant position throughout the forecast period. In the global API banking landscape, North America stands at the pinnacle, securing the largest market share.

A robust financial services industry, technological adoption, and a thriving fintech ecosystem contribute to North America’s leadership. Open banking initiatives, particularly in the United States, and a strong emphasis on cybersecurity align with API banking requirements, propelling growth.

North America stands as the undisputed leader in the global API banking market, boasting the largest market share due to its robust financial services industry and advanced technological adoption. The region’s prominent position is further cemented by a thriving fintech ecosystem that fosters collaboration between traditional financial institutions and innovative startups.

Open banking initiatives have especially gained traction in the US, compelling banks to embrace APIs for enhanced customer experiences and streamlined operations. The regulatory environment, with a strong emphasis on cybersecurity and data privacy, aligns seamlessly with the security requirements of API banking, propelling North America to the forefront of this financial evolution.

Large-scale banks and financial institutions in the region have heavily invested in API banking, showcasing a commitment to driving innovation and meeting the evolving needs of the digital age.

Asia Pacific Awaits Exceptional Growth Opportunities in API Banking

Asia Pacific is poised for exceptional growth, driven by rapid economic expansion, increasing digitalization, government-supported open banking initiatives, and a tech-savvy population eagerly embracing digital banking.

The Asia Pacific region emerges as a dynamic force in the global API banking market, poised for exceptional growth. Rapid economic expansion, increasing digitalization, and a burgeoning fintech landscape are propelling demand for API-based financial services.

Governments in the region are actively promoting open banking initiatives and digital transformation, accelerating the adoption of APIs. Countries such as India and China, with their large and tech-savvy populations, are embracing digital banking, contributing significantly to the robust growth of API banking in the Asia Pacific.

The region’s forward-looking approach to financial technology and the convergence of regulatory support, economic growth, and a digitally inclined populace position Asia Pacific as a key player shaping the future of the API banking landscape on a global scale.

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