Open finance refers to the sharing of personal as well as non-personal customer data held by financial sector intermediaries alongside other data holders, with third-party providers.
This is done with the purpose of providing a wide range of financial and information services. Open Finance essentially expands the scope of Open Banking, by transitioning payment and bank account data into a broader range of consumer data (credit, investment, insurance, pensions). It therefore has the potential to offer a more tailored, informed, and innovative service to help consumers and businesses better manage their finances. It also may help to foster innovation, competition and cost efficiency within the wider financial sector.
Open Finance is often hailed “The Future of Banking”, given how it will revolutionize the way both banks and users utilize financial data. So what does Open Finance entail, and how can it help both the financial institutions and the customers themselves?
In this white paper we dive deeper – exploring its recent historical context, the current regulatory framework, as well as looking ahead towards the future, with the implementation of FIDA. We will also look at how Open Banking makes banking more convenient for customers, while providing additional opportunities for Financial Service Providers (FSPs).
Despite its clear benefits, given the ease in which financial information can be exchanged, Open Finance brings forth its own security and technology considerations, which banks must proactively find solutions for. This is where SBS comes in; providing various compliance offerings for banks, helps them to manage the new demands brought on by Open Finance, while ensuring the evolving regulatory and standard requirements are met.
Open Finance will undoubtedly affect various sectors. Banks, but also lenders, electronic money and payment institutions, insurance and mortgage companies are expected to benefit from increased data sharing, provided they also manage possible risks and challenges.