Open finance and the future of digital financial services


Updated on June 10, 2020

It’s only been a few years since the introduction of Open Banking and PSD2, but in Europe and the UK policy makers are already beginning to explore what a transition toward open finance—or a legal right to all your financial data—could look like. Open finance is a natural, and necessary, next step to take after PSD2 and Open Banking, which gave consumers the legal right to access and control just their payment account data. These were groundbreaking moves that created a new regulated space for fintech innovation in Europe and gave people and businesses power over their own data.  

Despite its success, open banking did not go far enough—a person or business’ financial picture is much more than transaction history, real-time account balances or loan payment history. To fulfill the promise of open banking, people need to be able to securely share a wider pool of data including pensions and investments. Now regulators, policymakers and innovators across the world, from the UK’s FCA to the EU Commission to Australia and Singapore, are exploring how to provide consumers and businesses with full control over all their financial data, underpinned by regulation and enabled by technology.

Given our position as an intermediary for the financial services industry since 2013, we have learnings that can help shape what a successful open finance regime could look like. Similarly, 11:FS has many years of experience seeing the successes and shortcomings of Open Banking and PSD2 for open finance to build on. Together, we’ve teamed up for a joint report on how policymakers can achieve open finance, considering global approaches and wider impact.

Based on what we’ve seen Open Banking achieve, we foresee a future where open finance will transform an abundance of products and services across financial services and beyond. Getting approved for mortgages and loans could become instantaneous and fully digital with access to data on assets, liabilities, and net income. Switching a pension could become automatic based on current and projected portfolios. Financial advice could become much more personalized and powerful with  improved data access. These examples are a small sampling of what open finance makes possible: we don’t yet know the true value of an open financial system and all the potential use cases that could emerge.

What we do know is that with open finance people and small businesses gain more control over their financial data and receive more powerful and affordable services in return. Financial services innovators will develop better, more competitive solutions with access to data that was once held in incumbent silos.

To learn more about Plaid and 11:FS’s joint vision for open finance and how we get there, download the report at the link below.

Download report