Top 10 Most Successful Use Cases of Open Banking Around the World

Open banking, which refers to the practice of securely sharing financial data with third-party service providers through Application Programming Interfaces (APIs), has revolutionized the banking landscape across the globe. By enabling a more customer-centric approach, fostering innovation, and encouraging competition, open banking is helping banks offer better services, while also allowing consumers to access a wider range of financial products and services. In this article, we will explore the top 10 most successful use cases of open banking globally, highlighting key examples, facts, and figures to demonstrate how this innovation is reshaping the financial sector.

1. Personal Finance Management (PFM) Applications

One of the most popular use cases of open banking is the development of personal finance management apps. These applications aggregate financial data from different banks, allowing users to manage their finances more efficiently. The open banking APIs allow these apps to pull data such as transaction history, account balances, and spending patterns.

Example: Mint (USA) – Mint is a widely-used personal finance app that connects to over 20,000 financial institutions. It uses open banking APIs to track spending, create budgets, and alert users to unusual transactions. Mint’s capabilities have helped users save on average 20% of their annual expenditures by providing actionable insights on spending habits.

Impact: In the U.S., Mint boasts over 20 million active users, highlighting the growing demand for open banking-powered solutions. Such apps contribute to better financial health by empowering users to take control of their finances.

2. Smarter Credit Scoring

Open banking has enhanced the credit scoring process by enabling a more holistic approach that goes beyond traditional credit histories. By analyzing a wider range of financial data—such as transaction behavior, income levels, and savings patterns—open banking allows lenders to assess a borrower’s risk more accurately.

Example: Tink (Sweden) – Tink is a leading open banking platform that provides credit scoring solutions by analyzing transaction history and other financial data. Tink’s platform has helped financial institutions in Europe extend credit to more than 2 million consumers who might have been underserved or overlooked by traditional credit scoring models.

Impact: According to a European Commission study, using alternative credit scoring models powered by open banking data could potentially increase the approval rate of loans by 20-30% in some cases, reducing exclusion from financial services and promoting financial inclusion.

3. Improved Payments Services

Open banking enables real-time payments and improves the efficiency and security of the payment ecosystem. With open banking, consumers can make payments directly from their bank accounts rather than through intermediaries like credit cards or digital wallets.

Example: Klarna (Sweden) – Klarna is one of the most prominent buy-now-pay-later (BNPL) platforms, offering an alternative to traditional credit payments. Klarna utilizes open banking to streamline payments, enabling customers to make instant, direct payments via their bank accounts. Klarna’s instant payments system has attracted over 90 million active users globally.

Impact: Klarna’s open banking-powered payment model has increased consumer adoption, with a 50% higher conversion rate for merchants that use Klarna's payment system compared to traditional payment methods, as customers appreciate the convenience and security offered.

4. Cross-Border Payments

Open banking can drastically reduce the cost and complexity of cross-border payments by allowing consumers to use local payment channels rather than relying on expensive intermediaries. Through API-enabled access to real-time exchange rates and transaction data, banks and third-party providers can facilitate cheaper and faster international transfers.

Example: Wise (formerly TransferWise) (UK) – Wise leverages open banking to enable customers to send money internationally at a fraction of the cost of traditional bank transfers. By using open banking APIs, Wise directly connects to bank accounts and processes payments efficiently, avoiding the need for SWIFT network fees.

Impact: Wise has processed over ￡50 billion in cross-border payments, saving customers more than ￡1 billion in fees annually compared to traditional banking methods.

5. Digital Identity Verification

Open banking can play a pivotal role in strengthening digital identity verification processes, helping to reduce fraud and enhance customer trust. By utilizing the customer’s bank account data, third-party providers can confirm identities securely and instantly.

Example: TrueLayer (UK) – TrueLayer’s platform connects banks with financial institutions to securely verify user identities. The platform uses open banking APIs to allow for seamless digital onboarding, reducing the need for lengthy verification processes and improving user experiences.

Impact: TrueLayer’s service has been adopted by over 1,000 clients globally, and it has significantly streamlined KYC (Know Your Customer) processes. For banks, this means reduced operational costs and enhanced fraud prevention, with a 98% reduction in identity fraud cases.

6. Lending and Alternative Finance

Open banking has transformed the lending space by enabling new forms of lending that are more flexible, transparent, and accessible. Lenders can now access a wider array of data to offer tailored loans and alternative financing options, making it easier for consumers to access credit.

Example: Funding Circle (UK) – Funding Circle is a peer-to-peer lending platform that uses open banking to assess small business loans more effectively. By analyzing a company’s financial data, the platform can provide faster loan approvals and better rates than traditional lenders.

Impact: Since its inception, Funding Circle has lent over ￡10 billion to small businesses globally, empowering over 50,000 businesses with the capital they need to grow.

7. Investment and Wealth Management

Open banking has paved the way for more personalized investment and wealth management services by giving wealth managers and robo-advisors access to real-time financial data. By incorporating transaction and asset data, they can offer more relevant investment advice.

Example: Scalable Capital (Germany) – Scalable Capital is an investment management platform that uses open banking to analyze a customer’s financial situation, helping to create a diversified investment portfolio tailored to their risk profile and financial goals.

Impact: Scalable Capital has garnered over €3 billion in assets under management, and its personalized investment strategies have helped customers increase their portfolio returns by an average of 10-15% annually.

8. Insurance and Claims Processing

Open banking allows insurance companies to access relevant financial data, enabling them to offer more personalized insurance products. Moreover, insurers can use transaction data to speed up claims processing and minimize fraud.

Example: Zego (UK) – Zego, an insurance technology company, uses open banking data to offer personalized insurance policies for gig economy workers and small businesses. By analyzing real-time transactional data, Zego can provide accurate quotes and even adjust premiums based on usage patterns.

Impact: Zego has provided over ￡30 million in insurance premiums, helping to optimize insurance coverage for small businesses, freelancers, and gig economy workers. Claims are also processed much faster due to the seamless data integration.

9. Automated Savings Solutions

Open banking facilitates the development of automated savings tools that allow customers to save money without the need for manual intervention. These tools connect to a user’s bank account and automatically transfer small amounts into savings, based on spending patterns.

Example: Chip (UK) – Chip is a smart savings app that uses AI and open banking to analyze users’ spending habits. It automatically moves small amounts of money into savings, making it easier for users to accumulate savings without any effort.

Impact: Chip has helped users save over ￡80 million in total, with customers seeing an average savings increase of 25% annually.

10. Banking-as-a-Service (BaaS)

Open banking has enabled the growth of Banking-as-a-Service (BaaS), which allows non-financial companies to offer banking services. Through APIs, non-bank businesses can integrate financial products directly into their platforms, allowing for seamless, on-demand financial services.

Example: Railsbank (UK) – Railsbank offers BaaS solutions to allow companies to launch financial products such as payments, cards, and lending services without needing a banking license. They use open banking APIs to provide seamless banking features to non-financial companies.

Impact: Railsbank has raised over $70 million in funding and has partnered with several large-scale companies to launch new fintech products, reaching millions of users globally.

Conclusion

Open banking is transforming the financial services industry by enabling more efficient, personalized, and accessible financial products and services. From enabling faster payments to fostering financial inclusion and enabling the growth of new fintech products, open banking has proven its value across various use cases worldwide. As this trend continues, the opportunities for innovation and better consumer experiences will only expand, creating a more competitive and customer-friendly financial ecosystem.