The Open Banking Revolution is Uncovering Fresh Opportunities on Wall Street

Open banking promises to be one of the decade’s biggest innovations in fintech, and with its rapid expansion, we could be set to see some high-potential investment opportunities emerging on Wall Street. 

The room for growth within the open banking landscape is nothing short of astonishing. From a value recorded at $23.5 billion in 2023, the market is set to exceed $130 billion by 2032, representing a CAGR of more than 22%. 

There’s tangible evidence of this growth in action. According to a survey conducted by Mastercard across the US, UK, Nordic, and Australian markets, 85% of businesses use open banking services while 76% of consumers connect their financial accounts to third-party open banking tools. 

Because the industry is still in its infancy, many of the world’s leading open banking firms are still private startups, making it more challenging for investors to buy into the most innovative stocks today. However, with expectations of a pickup in M&A activity in 2025, we could see the return of some impressive market movements with acquisitions or IPOs launching in the months ahead. 

Despite this, there are still plenty of excellent investment opportunities for investors seeking to steal a march on the open banking revolutions. But first, let’s take a deeper look at what the term ‘open banking’ really means, and how it can change fintech forever: 

What is Open Banking? 

Open banking has been highlighted as a leading payment trend for the years ahead and represents a fundamental shift in the financial services sector. 

Focusing on accessibility, open banking breaks down the barriers between customers and banks and opens the door to greater inclusivity for core services and features. 

With open banking, consumers can access a range of financial products and services offered by third-party providers, and this can range from fintech startups to fully-fledged digital platforms. 

This wider access helps more users access financial management services and use personalized solutions to meet their individual wants and needs. 

Because open banking relies on the widespread distribution of financial data across carefully selected partners, users can gain access to all the services they need within one platform. 

Investing in Open Banking

Although leading open banking firms like Plaid and Stripe are yet to go public, investors can gain plenty of access to open banking stocks through other companies that are closely linked to the industry. 

One stock that could carry significant long-term potential in the open banking space is Robinhood (NASDAQ: HOOD). Having rallied more than 225% in 2024, HOOD is a stock that’s benefited significantly from the recent cryptocurrency market rally, and has even embraced AI with the acquisition of artificial intelligence trading platform Pluto Capital. 

This means that the stock is well-positioned to reap the rewards of growth throughout many different aspects of the tech sector, and thanks to a recent deal with Tiller, Robinhood’s platform offers comprehensive open banking support for its users. 

Another major stock to follow for open banking innovation is Block (NYSE: SQ). Formerly known as Square, Block became a fitting rebrand for CEO Jack Dorsey’s passion for blockchain technology, which offers a level of interconnected services that could pave the way for the firm to become a leading open banking platform. 

The firm’s Cash App has significant potential in the open banking space. With 57 million active monthly users, the sky’s the limit for how far Block can expand its consumer financial services. With direct deposits, debit cards, cryptocurrency compatibility, and stock trading all combined within the platform, Cash App could yet grow to become an open banking leader. 

Global Opportunities

Open banking isn’t limited to Wall Street firms, and the technology is finding exhilarating use cases on the world stage. In the Middle East, the Central Bank of Bahrain was the first to issue regulations specific to open banking in 2018, and the Bahrain Open Banking Framework soon followed in 2020, which focused on creating a common set of API specifications and guidelines on security and customer experience. 

As part of the country’s 2030 vision for economic growth, the Saudi Central Bank (SAMA) launched its Open Banking Lab in January 2023 by setting up a sandbox environment for users. The UAE also has its sights set on a Financial Infrastructure Transformation Programme that’s set to be implemented by 2026. 

The open banking revolution is set to become a global phenomenon, and investors can be well-positioned to take a more international focus on embracing this particular fintech boom over the coming months and years. 

The Age of Financial Inclusivity

Crucially, open banking can be seen as a sustainable investment because it opens the door to financial inclusivity that’s unimpacted by limitations in access to key services. 

The technology puts consumers and businesses at the heart of their financial management to access more personalized services and greater payment choices. Whether open banking is used to build wealth or lower transaction costs, it’s a technology that can spawn many use cases. 

Open banking can be taken to new heights with AI tools, and the quality of wealth management insights could be transformative for businesses and customers alike. With this in mind, the technology is well worth monitoring as part of a larger tech-focused portfolio, and may well continue to grow exponentially in the years ahead.