[190 Pages Report] The PSD2 & Open Banking Biometric Authentication Market size was estimated at USD 5.64 billion in 2023 and expected to reach USD 6.21 billion in 2024, at a CAGR 10.27% to reach USD 11.18 billion by 2030.
The second payment services directive (PSD2) is a regulation in the European Union aimed at reshaping the payment landscape by introducing enhanced consumer protection and fostering innovation among payment services. A foundation of PSD2 is the strong customer authentication (SCA) mandate, ensuring that electronic payments are safeguarded by at least two verification elements categorized as knowledge, possession, and inherence. Within this framework, biometric authentication has emerged as a critical tool in open banking, offering a secure and user-friendly way to authenticate users through unique biological attributes such as fingerprints, facial recognition, or iris scans. Embracing biometrics aligns with PSD2’s security directives and also elevates user experience by eliminating dependency on conventional tokens or passwords, thereby mitigating fraud risks and streamlining access to financial services. The advent of mobile banking applications has catalyzed a notable upsurge in the integration of biometric authentication within the financial sphere, driving the adoption of PSD2-compliant and open banking biometric solutions. This is complemented by the escalating significance of application program interfaces (APIs) across financial sectors, optimizing the synergy between various banking services and applications. Further propelling this trend is the imperative need to mitigate high-security risks associated with financial transactions, underpinning the necessity of robust multi-factor authentication mechanisms. However, the substantial costs involved, alongside the potential for inaccuracies and false positives that could undermine system efficiency, hinder the adoption of these solutions. Despite these hurdles, there are profound opportunities on the horizon; financial institutions are increasingly pivoting online, prompted by customer-centric regulatory enhancements, presenting ripe conditions for tech startups to innovate in the biometric authentication domain within the PSD2 and open banking biometric authentication market.
Function: Growing significance of real-time identity and access management systems
Authentication and authorization form the core of PSD2 and open banking biometric authentication. They ensure that access to financial data is strictly regulated and that only the rightful users can initiate and validate transactions. Detection systems focused on content-based attacks help in identifying malicious attempts that could be hidden within the transaction data or requests, thereby protecting both the customer and the financial institution. Data encryption is vital in safeguarding sensitive financial data in transit and at rest. Identity tracking mechanisms are important in monitoring and recording the usage of the banking infrastructure to prevent and trace unauthorized activities. Ensuring the integrity and validity of messages exchanged between banks, service providers, and customers is essential to prevent tampering and fraud. Traffic management tools are necessary to ensure the banking infrastructure can handle the load of requests without compromising on performance or security.
End Users: Higher deployment of PSD2 and open banking biometric authentication solutions by merchants for reducing friction in payment processes
Banks are primarily interested in implementing biometric authentication to enhance security and compliance with regulatory standards while improving the customer experience. High accuracy, reliability, and rapid authentication processes are crucial for them to minimize fraud and build customer trust. For customers, the priority lies in the convenience and ease of use that biometric authentication provides. They prefer seamless and secure access to their banking and payment services. There is also an increasing awareness and expectation for personalized and frictionless financial experiences. Merchants prioritize the reduction of cart abandonment rates and the provision of secure, yet expedient checkout experiences. Biometric authentication can help achieve these goals by streamlining the payment process and reducing the risk of chargebacks and fraud. Payment service providers (PSPs) are focused on offering a broad spectrum of secure payment options that can integrate with various merchant platforms. They require scalable and interoperable biometric solutions that can support a diverse range of payment methods and cater to different regulatory environments.
Regional Insights
In the Americas, the adaptation to PSD2 and open banking biometric authentication has seen a gradual increase, with the market showing a positive trajectory for digital payment methods. Financial institutions in North America, particularly in the United States and Canada, are investing substantially in biometric technologies to meet the growing demand for secure and convenient authentication methods. Latin America is also witnessing growth in PSD2 and open banking biometric authentication adoption, spurred by regulatory changes and digital transformation initiatives among banks aiming to improve financial inclusivity. In the EMEA region, the market for PSD2 and open banking biometric authentication has shown robust growth, primarily influenced by the European Union’s regulatory framework. The PSD2 directive has been a major catalyst in this market, as it emphasizes strong customer authentication (SCA), where biometrics play a pivotal role. European financial institutions are actively incorporating biometric technologies to comply with these regulations and to offer a more personalized banking experience. The Middle East and Africa are also seeing emerging adoption trends, with financial sectors innovating to include biometric systems for identity verification and transaction authentication. Within the APAC region, the adoption of PSD2 and open banking biometric authentication is varied, with advanced economies including Japan, Australia, and Singapore, being at the forefront of implementation. These countries are early adopters of innovative banking technologies, and there is an increasing preference for PSD2 and open banking biometric authentication solutions due to their enhanced security and convenience. Emerging economies in this region have also started embracing biometric authentication systems, aligning with the shift towards digital banking services.
FPNV Positioning Matrix
The FPNV Positioning Matrix is pivotal in evaluating the PSD2 & Open Banking Biometric Authentication Market. It offers a comprehensive assessment of vendors, examining key metrics related to Business Strategy and Product Satisfaction. This in-depth analysis empowers users to make well-informed decisions aligned with their requirements. Based on the evaluation, the vendors are then categorized into four distinct quadrants representing varying levels of success: Forefront (F), Pathfinder (P), Niche (N), or Vital (V).
Market Share Analysis
The Market Share Analysis is a comprehensive tool that provides an insightful and in-depth examination of the current state of vendors in the PSD2 & Open Banking Biometric Authentication Market. By meticulously comparing and analyzing vendor contributions in terms of overall revenue, customer base, and other key metrics, we can offer companies a greater understanding of their performance and the challenges they face when competing for market share. Additionally, this analysis provides valuable insights into the competitive nature of the sector, including factors such as accumulation, fragmentation dominance, and amalgamation traits observed over the base year period studied. With this expanded level of detail, vendors can make more informed decisions and devise effective strategies to gain a competitive edge in the market.
Key Company Profiles
The report delves into recent significant developments in the PSD2 & Open Banking Biometric Authentication Market, highlighting leading vendors and their innovative profiles. These include Accenture PLC, Apple Inc., Avanade Inc., Banfico Ltd, Capgemini SE, CardinalCommerce Corporation, ClearBank Ltd., Enfuce Financial Services Ltd., Fujitsu Limited, Google LLC by Alphabet Inc., Incode Technologies Inc., InfoCert S.p.A., INFOSISTEMA, SISTEMAS DE INFORMA??O, S.A. by JYON Group, iProov Limited, LexisNexis Risk Solutions Inc. by RELX Group PLC, Mastercard International Incorporated, Metro Bank PLC, Mollie B.V., Moneyhub Financial Technology Ltd, National Westminster Bank plc, Nok Nok Labs, Inc., Okta, Inc., Plaid Financial Ltd., Salt Edge Inc., TAS S.p.A., Tata Consultancy Services Limited, Tell Money Limited, Temenos Headquarters SA, and Thales Group.
Market Segmentation & Coverage
This research report categorizes the PSD2 & Open Banking Biometric Authentication Market to forecast the revenues and analyze trends in each of the following sub-markets:
- Function
- Authentication & Authorization
- Content Based Attacks Detection
- Data Encryption
- Identity Tracking
- Message Validation
- Traffic Management
- End Users
- Banks
- Customers
- Marchants
- Payment Service Provider
- Region
- Americas
- Argentina
- Brazil
- Canada
- Mexico
- United States
- California
- Florida
- Illinois
- New York
- Ohio
- Pennsylvania
- Texas
- Asia-Pacific
- Australia
- China
- India
- Indonesia
- Japan
- Malaysia
- Philippines
- Singapore
- South Korea
- Taiwan
- Thailand
- Vietnam
- Europe, Middle East & Africa
- Denmark
- Egypt
- Finland
- France
- Germany
- Israel
- Italy
- Netherlands
- Nigeria
- Norway
- Poland
- Qatar
- Russia
- Saudi Arabia
- South Africa
- Spain
- Sweden
- Switzerland
- Turkey
- United Arab Emirates
- United Kingdom
- Americas
The report offers valuable insights on the following aspects:
- Market Penetration: It presents comprehensive information on the market provided by key players.
- Market Development: It delves deep into lucrative emerging markets and analyzes the penetration across mature market segments.
- Market Diversification: It provides detailed information on new product launches, untapped geographic regions, recent developments, and investments.
- Competitive Assessment & Intelligence: It conducts an exhaustive assessment of market shares, strategies, products, certifications, regulatory approvals, patent landscape, and manufacturing capabilities of the leading players.
- Product Development & Innovation: It offers intelligent insights on future technologies, R&D activities, and breakthrough product developments.
The report addresses key questions such as:
- What is the market size and forecast of the PSD2 & Open Banking Biometric Authentication Market?
- Which products, segments, applications, and areas should one consider investing in over the forecast period in the PSD2 & Open Banking Biometric Authentication Market?
- What are the technology trends and regulatory frameworks in the PSD2 & Open Banking Biometric Authentication Market?
- What is the market share of the leading vendors in the PSD2 & Open Banking Biometric Authentication Market?
- Which modes and strategic moves are suitable for entering the PSD2 & Open Banking Biometric Authentication Market?
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