PSD2 & Open Banking Biometric Authentication Market - Global Forecast 2025-2032

The PSD2 & Open Banking Biometric Authentication Market is evolving rapidly, shaped by regulatory changes and the ongoing push for secure, seamless digital banking experiences. Senior leaders in financial services and fintech are driving adoption of advanced authentication technologies to address security, compliance, and user experience imperatives.

Market Snapshot: PSD2 & Open Banking Biometric Authentication Market

The PSD2 & Open Banking Biometric Authentication Market expanded from USD 6.21 billion in 2024 to USD 6.88 billion in 2025 and is expected to sustain strong growth, reaching an anticipated value of USD 13.89 billion by 2032 at a CAGR of 10.57%. This performance is closely linked to tightening regulatory requirements, rising demand for digital-first financial services, and continuous advances in authentication technologies. The sector is increasingly characterized by the deployment of multifactor authentication across banking channels, with financial organizations placing high priority on both compliance and agility. These trends reflect a broad global shift towards robust identity verification and adaptable solutions that fit diverse operational environments.

Scope & Segmentation

• Authentication Methods: Behavioral biometrics such as gait and keystroke analysis, facial recognition, fingerprint identification, iris recognition, and voice recognition technologies offer varied levels of security and user accessibility for institutions and consumers alike.
• Deployment Modes: Cloud-based (public and private) as well as on-premises options allow organizations to select approaches that align with their unique operational and regulatory requirements, supporting everything from agile rollouts to strict data residency mandates.
• Applications: Key use cases are found in ATM kiosks, online banking portals, mobile applications on Android and iOS platforms, and point-of-sale environments—encompassing countertop and self-service units—where secure yet frictionless authentication is essential.
• End User Industries: The sectors driving adoption include corporate and retail banking, financial services such as insurance and asset management, and fintech segments including payment service providers and wealth technology companies.
• Organization Size: Large enterprises and smaller organizations each show distinct preferences and requirements, influencing the scalability and sophistication of deployed biometric solutions.
• Regional Coverage: The Americas (including the United States, Canada, Mexico, Brazil, Argentina, Chile, Colombia, Peru), Europe, Middle East & Africa (key regions such as the United Kingdom, Germany, France, Italy, Spain, Russia, Netherlands, Sweden, Poland, Switzerland, UAE, Saudi Arabia, Qatar, Turkey, Israel, South Africa, Nigeria, Egypt, Kenya), and Asia-Pacific (including China, India, Japan, Australia, South Korea, Indonesia, Thailand, Malaysia, Singapore, Taiwan) all show unique adoption drivers and regulatory landscapes.
• Leading Companies: Major vendors influencing the market include Thales S.A., IDEMIA Group, NEC Corporation, Daon Limited, iProov, Accenture, HID Global Corporation, Suprema Inc., Aware Inc., and BIO-key International Inc.

Key Takeaways

• PSD2 mandates are a major force, prompting banks and fintech providers to accelerate biometric authentication integration and directly address both compliance and user experience requirements.
• Innovations in areas such as facial and behavioral biometrics, as well as AI-powered identity verification, are elevating security postures and supporting frictionless digital journeys for end users.
• The preference for cloud-based deployment models reflects a growing demand for agility and regular updates in biometric systems, especially for institutions with geographically dispersed operations; on-premises deployments remain vital where regulatory or infrastructure needs prevail.
• Regional dynamics are pronounced: Europe demonstrates strong regulatory maturity and robust open banking support, while Asia-Pacific distinguishes itself through broad mobile banking adoption and expansive digital identity programs.
• Strategic alliances between biometric vendors, core banking system providers, and cloud technology partners are emerging as key enablers for multi-modal, cross-channel authentication schemes and broader market penetration.
• Increasing use of behavioral biometrics and more granular segmentation by use case and organization size foster tailored innovation, enabling ecosystem participants from traditional financial institutions to fintech disruptors to meet specific market needs.

Tariff Impact

Recent shifts in U.S. tariffs targeting semiconductor sensors and camera modules are influencing procurement decisions across banking and fintech operations. Vendors reliant on hardware-intensive biometric tools like fingerprint and iris scanners face new cost constraints, prompting a strategic pivot towards software-driven, scalable authentication solutions. This change enhances the role of cloud-based deployments and motivates collaborations with nearshore manufacturing partners, shifting the competitive landscape toward vendors displaying adaptability and resilience amid evolving trade environments.

Methodology & Data Sources

This report adopts a holistic research approach, combining primary interviews with sector stakeholders, structured surveys, and perspectives from senior executives in banking, fintech, and regulatory roles. The data is supplemented by secondary sources, such as regulatory filings and relevant market studies, ensuring comprehensive and reliable analysis aligned with leading industry standards.

Why This Report Matters

• Enables informed technology investment and operational planning, supporting regulatory compliance and digital transformation objectives across key market segments.
• Provides targeted segmentation analysis—by authentication method, deployment strategy, and industry vertical—supporting tailored market entry and growth strategies that reflect local and global trends.
• Delivers actionable intelligence on current competitive positioning, evolving partnership models, and the impact of supply chain developments on strategic decisions for technology and financial executives.

Conclusion

Biometric authentication is fundamental to building secure, user-focused open banking environments. Institutions aligning their strategies with regulatory and technology shifts will be prepared to lead in digital finance transformation, ensuring both resilience and enhanced customer trust.

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