Open Banking will evolve into ‘Open Finance and Open Data’

The Open Banking data sharing transformation is set to evolve into more wide-ranging changes to the financial services industry, including Open Finance and Open Data, according to a panel of experts.

Speaking at an event discussing the future of FinTech partnerships in Open Banking, Romi Savova, chief executive of pension consolidation platform PensionBee, predicted that the next 12 months will see incumbents and challengers alike focus on streamlining the processing of transactions using open Application Programming Interfaces (APIs).

“This is the natural next step for the initiative and, by this time next year, we will be discussing how to make payment transactions even better,” she said.

However, Savova explained this was the first stage in a much longer journey for the potential use cases of data sharing in the industry.

“Now that the big players in the industry are increasingly coming on board, we should see an acceleration in the services that will benefit from Open Banking – as an industry, I see us moving from Open Banking to Open Finance and eventually to Open Data,” she said.

The second Payment Services Dirtective (PSD2) regulation enables banks and financial institutions to share financial data across multiple platforms via APIs and display aggregated account information in a single platform.

The emerging concepts of Open Finance and Open Data take this process a stage further by applying the idea of seamless exchange to a wider range of more complex financial tools and services such as credit and mortgages.

Open Data opens the door to the integration of much wider data sets - such as health data gathered by wearable devices and smart home technology - into a centralised platform, in order to inform better business and consumer decision-making.

Leon Muis, chief executive of money management app Yolt agreed that further integration would drive changes in the industry, with third party partnerships and collaboration between FinTechs and incumbents a key feature of the evolution of Open Banking.

“The next 12 months will be shaped by users experimenting and creating their own financial ecosystem, mixing and matching the money apps and financial management tools they need,” he stated. “Ever-closer and more seamless in-app integration and collaboration between fintechs is making this easier and easier.”

However, the emergence of Open Finance and Open Data initiatives would depend on consumer education and wider adoption amongst consumers, said Emma Byrne, head of communications at the Open Banking Implementation Entity, who noted that big advertising campaigns alone won’t be enough to raise the profile.

“Instead, what’s needed is for all the players within the Open Banking ecosystem to play their part in building not only awareness and adoption but also trust; ultimately resulting in consumers adopting innovative apps,” she said.

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