Is Open Finance worth getting excited about, or is it just spin?

Sifted, 2020-07-22


  • Open banking (allowing users to share their banking info with selected apps for better money management) is not being widely adopted by users.

  • Open finance extends the list of sharing entities to pension funds, savings accounts, trading apps and other assets. Clearly a more holistic view on one’s finances.


Consumers are not will to share their financial info for the purpose of “more personalized services”.

  • Lack of awareness and “what’s in it for me?”

  • Will the info be actionable? (How much more $ will I retire with if I switch my pension account to another provider charging lower commissions?)

  • What is the business model? Commissions or customer pays?

  • Risk of “privacy premiums”: too much or too little data can lead to worse outcomes for consumers (products, terms).

Data protection is paramount.

  • Regulatory data protection rules are not enough. (Once a leak is there, it’s there)

  • Yes, users can revoke access to the data. But what if they explicitly sell it?

  • Will customers believe that their data will only be given to those who they authorize?

  • And some regulated companies will lose customer data nonetheless.

Target Audience

  • Younger generation needs scoring (for a loan or lease) more than management.

  • Older generation needs overview of all their accounts (of which they have more).

  • Maybe checking / savings / investment / pension accounts are the only overlap.

  • SMBs may benefit by managing their liquidity and getting financing based off their current position, avoiding loan application processes.

o   This all boils down to real-time scoring (a slight variation of existing products).

o   … and a bunch of bells and whistles, which are not likely to change consumer behaviour.