Open Finance

From Open Banking to Open Finance

Open Finance is the extension of the principles of Open Banking to a wider range of financial products. Open Banking, introduced in the UK under the Competition and Markets Authority's remedy and the European PSD2 framework, gives customers the right to share their payment-account data, and to initiate payments, through secure, authorised interfaces. Open Finance takes that same model, customer consent and standardised data sharing, and applies it beyond current accounts.

The ambition is that a customer could permit a provider to access data about savings, mortgages, consumer credit, pensions, investments and insurance, in the same controlled way they already can for their bank account. Where Open Banking is largely established and operating, Open Finance is still developing, with the direction of travel shaped by regulatory and legislative work on data sharing in financial services.

What it would mean for lenders

For UK lenders, the significance of Open Finance is the breadth of verified data it could make available for decisioning. Open Banking already lets a lender see a borrower's current-account income and spending with consent. Open Finance would widen that view to include existing credit commitments held elsewhere, savings and investment balances, and other obligations, giving a far more complete picture of a borrower's overall financial position.

• A fuller view of existing debts and commitments across providers
• Verified savings and assets to sit alongside income and spending
• Richer affordability assessment grounded in real, consented data
• Smoother product switching as customers port their own data

Affordability and responsible lending

The clearest benefit for lending is to affordability assessment. The FCA's CONC rules and the Consumer Duty require lenders to assess whether borrowing is genuinely affordable and to avoid foreseeable harm. The more complete and verified the data a lender holds, the better it can make that judgement, both to approve creditworthy applicants fairly and to recognise where additional borrowing would push someone into difficulty.

Open Finance could also help lenders support existing customers more effectively. A consented, cross-product view would make it easier to spot early signs of strain, to tailor forbearance, and to offer products that genuinely fit a customer's circumstances rather than their stated situation alone. In principle this serves both inclusion and protection at the same time.

Consent, trust and the road ahead

Open Finance only works if customers trust it, and that trust rests on consent and control. The model is built on the customer explicitly authorising access, for a defined purpose and a limited period, and being able to withdraw it. Lenders adopting Open Finance data will need to be transparent about what they access and why, use it only within the scope of the consent given, and protect it to a high standard.

Because the framework is still maturing, lenders should treat Open Finance as a direction rather than a finished system. The sensible stance is to build decisioning and affordability processes that already make good use of Open Banking data today, and that can incorporate wider Open Finance sources as they become available, so the firm is ready to benefit as the ecosystem develops.