Application programming interface (API) banking refers to a set of protocols that makes a bank’s services available to other third-party companies via API. This helps both banks and third-party companies augment their complementary specialties and offerings more than they can provide to their customers by themselves. Furthermore, API plays a crucial role in risk management and compliance in the banking industry. For instance, API provides real-time access to transaction data, helping banks monitor and detect suspicious activities for fraud prevention and anti-money laundering purposes. Moreover, it can assist in streamlining regulatory compliance processes, such as Know Your Customer (KYC) verification, by integrating with identity verification services.
One of the key drivers of the API banking market is digital transformation. The ongoing digital transformation in the banking industry has created the need for seamless integration and connectivity between different systems and platforms. API enables banks to expose their services and data securely, allowing third-party developers to build innovative applications and services for their customers. This digitalization trend has accelerated the adoption of API banking. Furthermore, open banking regulations have mandated banks to open up their data and services through API and have significantly contributed to the growth of the API banking market. In addition, customer expectations drive the API banking market growth. Customers demand personalized and seamless banking experiences. API banking enables banks to provide enhanced digital services, such as real-time payments, account aggregation, and personalized financial management tools. By leveraging API, banks can offer their customers a broader range of services and integrations with various platforms, applications, and devices. However, regulatory compliance and security concerns are some of the factors that hamper the API banking market growth. Furthermore, legacy system challenges are another factor limiting the growth of the market. Many banks still rely on legacy systems that were not designed with API integration in mind. These systems often lack the flexibility and agility required for seamless API banking. Integrating API with legacy systems can be complex and require significant resources, Including time, money, and skilled IT professionals. The challenge lies in modernizing the existing infrastructure and ensuring compatibility between the API and the legacy systems. The cost and effort associated with upgrading these systems act as a barrier to the rapid adoption of API banking. On the contrary, technological advancements and market competition are expected to provide lucrative growth opportunities to the API banking market in the upcoming years.
The API banking market is segmented into component, deployment, enterprise size, and region. By component, the market is differentiated into solution and service. Depending on deployment, it is fragmented into on-premise and cloud. The enterprise size segment is divided into large enterprises and small and medium-sized enterprises. Region wise, the market is segmented into North America, Europe, Asia-Pacific, and LAMEA.
The key players operating in the API banking market Include Infosys Limited, IBM Corporation, BankProv, FidyPay, Razorpay, Google LLC, Oracle Corporation, Salesforce, Inc., SAP SE, and Cloud Software Group, Inc. These players have adopted various strategies to Increase their market penetration and strengthen their position in the API banking industry.
Key Benefits for Stakeholders
One of the key drivers of the API banking market is digital transformation. The ongoing digital transformation in the banking industry has created the need for seamless integration and connectivity between different systems and platforms. API enables banks to expose their services and data securely, allowing third-party developers to build innovative applications and services for their customers. This digitalization trend has accelerated the adoption of API banking. Furthermore, open banking regulations have mandated banks to open up their data and services through API and have significantly contributed to the growth of the API banking market. In addition, customer expectations drive the API banking market growth. Customers demand personalized and seamless banking experiences. API banking enables banks to provide enhanced digital services, such as real-time payments, account aggregation, and personalized financial management tools. By leveraging API, banks can offer their customers a broader range of services and integrations with various platforms, applications, and devices. However, regulatory compliance and security concerns are some of the factors that hamper the API banking market growth. Furthermore, legacy system challenges are another factor limiting the growth of the market. Many banks still rely on legacy systems that were not designed with API integration in mind. These systems often lack the flexibility and agility required for seamless API banking. Integrating API with legacy systems can be complex and require significant resources, Including time, money, and skilled IT professionals. The challenge lies in modernizing the existing infrastructure and ensuring compatibility between the API and the legacy systems. The cost and effort associated with upgrading these systems act as a barrier to the rapid adoption of API banking. On the contrary, technological advancements and market competition are expected to provide lucrative growth opportunities to the API banking market in the upcoming years.
The API banking market is segmented into component, deployment, enterprise size, and region. By component, the market is differentiated into solution and service. Depending on deployment, it is fragmented into on-premise and cloud. The enterprise size segment is divided into large enterprises and small and medium-sized enterprises. Region wise, the market is segmented into North America, Europe, Asia-Pacific, and LAMEA.
The key players operating in the API banking market Include Infosys Limited, IBM Corporation, BankProv, FidyPay, Razorpay, Google LLC, Oracle Corporation, Salesforce, Inc., SAP SE, and Cloud Software Group, Inc. These players have adopted various strategies to Increase their market penetration and strengthen their position in the API banking industry.
Key Benefits for Stakeholders
- The study provides in-depth analysis of the API banking market along with current trends and future estimations to illustrate the imminent investment pockets.
- Information about key drivers, restrains, & opportunities and their impact analysis on the API banking market size are provided in the report.
- The Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the industry.
- The quantitative analysis of the API banking market from 2022 to 2032 is provided to determine the market potential.
Key Market Segments
By Component
- Solution
- Service
By Deployment
- On-premise
- Cloud
By Enterprise Size
- Large Enterprises
- Small and Medium-sized Enterprises
By Region
- North America
- U.S.
- Canada
- Europe
- UK
- Germany
- France
- Italy
- Spain
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- Australia
- South Korea
- Rest of Asia-Pacific
- LAMEA
- Latin America
- Middle East
- Africa
Key Market Players
- BankProv
- Cloud Software Group, Inc.
- FidyPay
- Google LLC
- IBM Corporation
- Infosys Limited
- Oracle Corporation.
- Razorpay
- Salesforce, Inc.
- SAP SE
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Table of Contents
CHAPTER 1: INTRODUCTION
CHAPTER 2: EXECUTIVE SUMMARY
CHAPTER 3: MARKET OVERVIEW
CHAPTER 4: API BANKING MARKET, BY COMPONENT
CHAPTER 5: API BANKING MARKET, BY DEPLOYMENT
CHAPTER 6: API BANKING MARKET, BY ENTERPRISE SIZE
CHAPTER 7: API BANKING MARKET, BY REGION
CHAPTER 8: COMPETITIVE LANDSCAPE
CHAPTER 9: COMPANY PROFILES
List of Tables
List of Figures
Executive Summary
According to a new report, titled, 'API Banking Market,' The API banking market was valued at $24.7 billion in 2022, and is estimated to reach $217.3 billion by 2032, growing at a CAGR of 24.7% from 2023 to 2032.The API Banking Market is likely to experience a significant growth rate of 24.7% from 2022-2032 owing to the open banking initiatives, digital transformation and technological advancements.
API Banking, also known as Open Banking or Banking as a Service (BaaS), refers to a system where banks or financial institutions provide access to their banking services and data through application programming interfaces (APIs). These APIs allow authorized third-party developers to build new applications and services that can interact with the bank's systems and provide banking functionality to end users. Furthermore, it facilitates the integration of banking services into third-party applications, platforms, or systems. It allows developers to embed banking functionalities, such as account balance inquiries, transaction history, fund transfers, and payment initiation, directly into their applications. Moreover, it enables the secure sharing of customer data with authorized third parties. Banks can expose specific data endpoints through APIs, allowing authorized entities to access customer account information and transaction data with user consent. This facilitates services like personal finance management, financial planning, and credit scoring.
The open banking initiatives is one of the key factors driving the demand for the API banking market. Open banking regulations, such as the European Union's Revised Payment Services Directive (PSD2) and similar initiatives in other regions, are fueling the adoption of API banking. These regulations mandate banks to open up their customer data and payment infrastructure through APIs, fostering competition, innovation, and collaboration between traditional banks and fintech startups. Furthermore, APIs enable banks to provide personalized and tailored services to their customers. By leveraging APIs, banks can integrate their systems with various applications, including mobile banking apps, personal finance management tools, and other fintech services. In addition, the rapid digital transformation in the banking and financial services industry is a major driver for the growth of the API banking market. Banks are increasingly adopting APIs to enable seamless integration with third-party applications, allowing them to offer innovative digital services and enhance customer experience. However, regulatory compliance and security concerns are the factors hampering the growth of the market. On the contrary, rapid advancements in technology, such as cloud computing, big data analytics, and artificial intelligence, have played a crucial role in providing lucrative growth opportunities for the API banking market. These technologies enable banks and financial institutions to leverage APIs to streamline their operations, enhance customer experiences, and create new digital services. Further, changing customer expectations and preferences has been instrumental in driving the adoption of API banking. Customers now seek personalized, on-demand, and user-friendly financial services. They demand seamless integration between banking and non-banking applications, allowing them to manage their finances in a holistic manner.
Furthermore, APIs provide a standardized and efficient way to connect systems and applications. They enable banks to rapidly develop and deploy new services by leveraging existing APIs, reducing development time and costs. This agility is crucial in the fast-paced digital banking landscape, where time-to-market for new products and services is a competitive advantage. Moreover, it offers new revenue streams for financial institutions. By exposing their APIs to authorized third parties, banks can monetize their services through partnerships, revenue-sharing models, or API access fees. This enables banks to generate additional income while extending their reach beyond traditional banking boundaries. Therefore, these factors provide major growth opportunities for the market.
The market also offers growth opportunities to the key players in the market. Key players are adopting strategies to strengthen their market positions in the API banking industry, including new technology adoption, product developments, mergers and acquisitions, joint ventures, alliances, and partnerships. For instance, in October 2021, Axis Bank launched an open Application Programming Interface (API) to facilitate banking services integrated across platforms for its retail and corporate customers. The API banking portal has a range of products, covering over 200 retail APIs across cards, deposits, accounts, and loans, 51 corporate APIs across payments, trade, collections, bill payments, and cross-cutting APIs.
The API banking market is segmented into component, deployment, enterprise size, and region. By component, the market is differentiated into solution and service. Depending on deployment, it is fragmented into on-premise and cloud. The enterprise size segment is divided into large enterprises and small and medium-sized enterprises. Region wise, it is analyzed across North America (the U.S., and Canada), Europe (UK, Germany, France, Italy, Spain, and rest of Europe), Asia-Pacific (China, Japan, India, Australia, South Korea, and rest of Asia-Pacific), and LAMEA (Latin America, Middle East, and Africa).
The key players profiled in the study are Infosys Limited, IBM Corporation, BankProv, FidyPay, Razorpay, Google LLC, Oracle Corporation, Salesforce, Inc., SAP SE, and Cloud Software Group, Inc. The players in the market have been actively engaged in the adoption of various strategies such as business expansion, product launch, collaboration, and partnership to remain competitive and gain an advantage over the competitors in the market. For instance, in July 2021, BankProv, an innovative, commercial bank that finds solutions for business and private clients, built a series of industry-leading APIs, inclusive of the new ProvXchange network for 24/7, client-to-client, real-time transfers. ProvXchange enables BankProv clients to transfer between their accounts and the accounts of other BankProv clients in real time without the delays of traditional payment rails. Using the bank's APIs, clients can also get up-to-date, accurate information on their accounts to effectively maintain receivables and payables, and easily maximize business productivity.
Key Market Insights
- By component, the solution segment was the highest revenue contributor to the market and is estimated to reach $126.608 million by 2032, with a CAGR of 23.4%. However, the service segment is estimated to be the fastest-growing segment with a CAGR of 26.7% during the forecast period.
- By deployment, the on-premise segment was the highest revenue contributor to the market, and is estimated to reach $109,599.25 million by 2032, with a CAGR of 22.4%. However, the cloud segment is estimated to be the fastest-growing segment with a CAGR of 27.5% during the forecast period.
- By enterprise size, the large enterprises segment was the highest revenue contributor to the market, and is estimated to reach $129,132.16 million by 2032, with a CAGR of 23.3%. However, the small and medium-sized enterprises segment is estimated to be the fastest-growing segment with a CAGR of 27.1% during the forecast period.
- Based on region, North America was the highest revenue contributor, accounting for $9,348.23 million in 2022, and is estimated to reach $64,946.96 million by 2032, with a CAGR of 21.7%. However, Asia-Pacific is estimated to be the fastest-growing region with a CAGR of 29.0% during the forecast period.
Companies Mentioned
- BankProv
- Cloud Software Group, Inc.
- FidyPay
- Google LLC
- IBM Corporation
- Infosys Limited
- Oracle Corporation.
- Razorpay
- Salesforce, Inc.
- SAP SE
Methodology
The analyst offers exhaustive research and analysis based on a wide variety of factual inputs, which largely include interviews with industry participants, reliable statistics, and regional intelligence. The in-house industry experts play an instrumental role in designing analytic tools and models, tailored to the requirements of a particular industry segment. The primary research efforts include reaching out participants through mail, tele-conversations, referrals, professional networks, and face-to-face interactions.
They are also in professional corporate relations with various companies that allow them greater flexibility for reaching out to industry participants and commentators for interviews and discussions.
They also refer to a broad array of industry sources for their secondary research, which typically include; however, not limited to:
- Company SEC filings, annual reports, company websites, broker & financial reports, and investor presentations for competitive scenario and shape of the industry
- Scientific and technical writings for product information and related preemptions
- Regional government and statistical databases for macro analysis
- Authentic news articles and other related releases for market evaluation
- Internal and external proprietary databases, key market indicators, and relevant press releases for market estimates and forecast
Furthermore, the accuracy of the data will be analyzed and validated by conducting additional primaries with various industry experts and KOLs. They also provide robust post-sales support to clients.
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