PSD2 & Open Banking Biometric Authentication Market by Function (Authentication & Authorization, Content Based Attacks Detection, Data Encryption), End Users (Banks, Customers, Marchants) - Global Forecast 2024-2030

[185 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.

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.

The market dynamics represent an ever-changing landscape of the PSD2 & Open Banking Biometric Authentication Market by providing actionable insights into factors, including supply and demand levels. Accounting for these factors helps design strategies, make investments, and formulate developments to capitalize on future opportunities. In addition, these factors assist in avoiding potential pitfalls related to political, geographical, technical, social, and economic conditions, highlighting consumer behaviors and influencing manufacturing costs and purchasing decisions.

• Market Drivers
  • Increasing Number of Users with Mobile Banking Application
  • Rising Importance of Application Program Interfaces (APIs) in Different Financial Sectors
  • High-Security Risk in Financial Transactions and Need For Multi-Factor Authentication in Payment Systems
• Market Restraints
  • High Cost for Security Solution and Potential False Positives & Inaccuracy
• Market Opportunities
  • Major Shift of Financial Institutions Toward the Online Business and Improving Financial Services with Customer-Centric Regulation
  • Favorable Ecosystem for Tech-Startups to Develop Biometric Authentication
• Market Challenges
  • Complexities in Minimizing Demographic Bias in Biometrics

• 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.

The porter's five forces analysis offers a simple and powerful tool for understanding, identifying, and analyzing the position, situation, and power of the businesses in the PSD2 & Open Banking Biometric Authentication Market. This model is helpful for companies to understand the strength of their current competitive position and the position they are considering repositioning into. With a clear understanding of where power lies, businesses can take advantage of a situation of strength, improve weaknesses, and avoid taking wrong steps. The tool identifies whether new products, services, or companies have the potential to be profitable. In addition, it can be very informative when used to understand the balance of power in exceptional use cases.

The value chain of the PSD2 & Open Banking Biometric Authentication Market encompasses all intermediate value addition activities, including raw materials used, product inception, and final delivery, aiding in identifying competitive advantages and improvement areas. Critical path analysis of thePSD2 & Open Banking Biometric Authentication Market identifies task sequences crucial for timely project completion, aiding resource allocation and bottleneck identification. Value chain and critical path analysis methods optimize efficiency, improve quality, enhance competitiveness, and increase profitability. Value chain analysis targets production inefficiencies, and critical path analysis ensures project timeliness. These analyses facilitate businesses in making informed decisions, responding to market demands swiftly, and achieving sustainable growth by optimizing operations and maximizing resource utilization.

The regulatory framework analysis for the PSD2 & Open Banking Biometric Authentication Market is essential for ensuring legal compliance, managing risks, shaping business strategies, fostering innovation, protecting consumers, accessing markets, maintaining reputation, and managing stakeholder relations. Regulatory frameworks shape business strategies and expansion initiatives, guiding informed decision-making processes. Furthermore, this analysis uncovers avenues for innovation within existing regulations or by advocating for regulatory changes to foster innovation.

The market share analysis is a comprehensive tool that provides an insightful and in-depth assessment of the current state of vendors in the PSD2 & Open Banking Biometric Authentication Market. By meticulously comparing and analyzing vendor contributions, companies are offered a greater understanding of their performance and the challenges they face when competing for market share. These contributions include overall revenue, customer base, and other vital metrics. 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 these illustrative details, vendors can make more informed decisions and devise effective strategies to gain a competitive edge in the market.

The FPNV positioning matrix is essential in evaluating the market positioning of the vendors in the PSD2 & Open Banking Biometric Authentication Market. This matrix offers a comprehensive assessment of vendors, examining critical metrics related to business strategy and product satisfaction. This in-depth assessment 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, namely Forefront (F), Pathfinder (P), Niche (N), or Vital (V).

• Tell Money Limited Partners with Moorwand for PSD2 Compliance

  Tell Money Limited, a PSD2 compliance solutions provider, has formed a strategic alliance with Moorwand, an e-money institution (EMI). This partnership is poised to bolster regulatory adherence, safeguarding EMIs from the perils of non-compliance, including thorough investigations, hefty fines, and operational limitations. As part of the collaboration, Moorwand is expected to leverage tell.money's flagship product, tell.gateway, to expedite the deployment of an all-encompassing PSD2 solution. [Published On: December 08, 2023]

• Banfico and InfoCert Announce Exclusive Partnership to Offer Open Banking / PSD2 Certificates from Banfico’s OB Directory

  Banfico Ltd, a provider of open banking technology solutions, has announced its collaboration with InfoCert S.p.A, Europe's certificate authority, to bolster security in its OB directory service. Renowned for verifying open banking certifications and enabling real-time third-party provider (TPP) regulatory status checks, Banfico's offering is now further reinforced by InfoCert's security and trust service expertise. This partnership facilitates banks and TPPs in obtaining and managing their open banking certificates, such as QWAC/QSealC or OBWAC/OBSealC, through the open banking directory, ensuring adherence to regulatory standards and safeguarded financial data transactions throughout Europe. [Published On: May 25, 2023]

• Shanghai Commercial Bank Taps Salt Edge for PSD2 Compliance Solution

  Shanghai Commercial Bank, based in Hong Kong, has strategically allied with Salt Edge to embrace PSD2 compliance for its online banking functions, tapping into the innovative realm of open banking to enrich customer experiences. This partnership positions Shanghai Commercial Bank to extend a more connected financial management experience to its customers, empowering them with secure access to external applications and thus enabling them to keep track of their financial health across various platforms with ease. [Published On: February 28, 2023]

The report delves into recent significant developments in the PSD2 & Open Banking Biometric Authentication Market, highlighting leading vendors and their innovative profiles. These include Plaid Financial Ltd., Incode Technologies Inc., Tell Money Limited, iProov Limited, Mollie B.V., Okta, Inc., Accenture PLC, Banfico Ltd, INFOSISTEMA, SISTEMAS DE INFORMAÇÃO, S.A. by JYON Group, Salt Edge Inc., Temenos Headquarters SA, Google LLC by Alphabet Inc., National Westminster Bank plc, Nok Nok Labs, Inc., ClearBank Ltd., Capgemini SE, Fujitsu Limited, TAS S.p.A., LexisNexis Risk Solutions Inc. by RELX Group PLC, Apple Inc., Moneyhub Financial Technology Ltd, Thales Group, Avanade Inc., Tata Consultancy Services Limited, Mastercard International Incorporated, Metro Bank PLC, CardinalCommerce Corporation, InfoCert S.p.A., and Enfuce Financial Services Ltd..

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

1. Market Penetration: This section thoroughly overviews the current market landscape, incorporating detailed data from key industry players.
2. Market Development: The report examines potential growth prospects in emerging markets and assesses expansion opportunities in mature segments.
3. Market Diversification: This includes detailed information on recent product launches, untapped geographic regions, recent industry developments, and strategic investments.
4. Competitive Assessment & Intelligence: An in-depth analysis of the competitive landscape is conducted, covering market share, strategic approaches, product range, certifications, regulatory approvals, patent analysis, technology developments, and advancements in the manufacturing capabilities of leading market players.
5. Product Development & Innovation: This section offers insights into upcoming technologies, research and development efforts, and notable advancements in product innovation.

1. What is the current market size and projected growth?
2. Which products, segments, applications, and regions offer promising investment opportunities?
3. What are the prevailing technology trends and regulatory frameworks?
4. What is the market share and positioning of the leading vendors?
5. What revenue sources and strategic opportunities do vendors in the market consider when deciding to enter or exit?