Over the past decade, open banking has become one of the defining developments in financial services. By enabling customers to securely share banking data with authorized third parties through standardized application programming interfaces (APIs), it has encouraged innovation, strengthened competition and improved digital financial experiences.
Yet open banking is increasingly viewed as only the beginning.
Across many markets, policymakers, regulators and financial institutions are now exploring a broader model known as open finance. Rather than limiting customer-permissioned data sharing to payment accounts and current accounts, open finance extends similar principles across a much wider range of financial products, including savings, mortgages, investments, pensions, insurance and consumer lending.
This evolution reflects a broader shift in how financial services are delivered. Customers increasingly expect their financial information to move securely across institutions, allowing them to access more personalized services while retaining greater control over their own data.
According to the OECD, open finance represents the next stage in the evolution of open banking by expanding secure, customer-permissioned data sharing beyond payment accounts to encompass a broader range of financial products and services. (OECD)
Rather than replacing open banking, open finance builds upon its foundations to create a more connected financial ecosystem.
Understanding the Difference Between Open Banking and Open Finance
Open banking focuses primarily on sharing banking data between financial institutions and authorized third-party providers.
Typical information includes:
current accounts
payment transactions
account balances
payment initiation
transaction history
Open finance significantly expands this scope.
Depending on the framework adopted within a jurisdiction, customer-permissioned data may also include:
savings accounts
mortgages
personal loans
investments
pensions
insurance policies
credit products
wealth management information
The Bank for International Settlements (BIS) explains that open finance extends the principles of open banking by covering a broader range of financial products while enabling customer-authorized access to financial data to support new services and business models. (Bank for International Settlements)
The emphasis therefore shifts from banking data alone to an integrated financial view.
Customer Control Is Becoming the Central Principle
The evolution toward open finance is driven by a simple concept: customers should determine how their financial information is used.
Instead of institutions controlling financial data in isolation, customers increasingly authorize secure sharing with approved service providers.
This customer-centric model enables individuals and businesses to:
compare financial products
consolidate financial information
access personalized advice
simplify switching providers
improve financial planning
streamline credit applications
Importantly, consent remains fundamental.
Modern open finance frameworks are designed around customer authorization, transparency and clearly defined permissions.
Trust therefore remains central to successful implementation.
APIs Continue to Form the Technical Foundation
Application Programming Interfaces remain the technological backbone of open finance.
Secure APIs enable financial institutions to exchange authorized information efficiently while protecting customer privacy.
Modern API ecosystems increasingly support:
account information
investment portfolios
insurance data
lending information
pension records
payment initiation
customer verification
Standardized APIs improve interoperability while reducing reliance on older techniques such as screen scraping.
As more financial products become connected, APIs enable information to move securely across increasingly diverse financial ecosystems.
Financial Services Are Becoming More Connected
Open finance reflects a broader movement toward integrated financial services.
Customers increasingly interact with multiple providers rather than relying exclusively on a single financial institution.
A customer may simultaneously use:
one bank for payments
another institution for savings
a separate mortgage provider
an independent investment platform
a digital insurance provider
a financial planning application
Open finance enables these services to operate more cohesively while reducing information silos.
The OECD notes that broader financial data sharing has the potential to improve financial products, encourage innovation and expand customer choice while requiring appropriate safeguards for privacy, consent and liability. (OECD)
Personalization Is Becoming More Sophisticated
As customer-authorized financial data becomes more comprehensive, financial institutions can develop increasingly personalized services.
Potential applications include:
customized financial planning
tailored lending decisions
investment recommendations
insurance products
retirement planning
cash flow forecasting
financial wellness tools
Rather than relying on isolated datasets, providers gain a broader understanding of customer financial circumstances.
This enables more relevant recommendations while improving customer experience.
However, personalization must always operate within clearly defined consent frameworks and applicable privacy regulations.
Financial Inclusion May Benefit from Broader Data Sharing
Open finance also has the potential to improve financial inclusion.
Many individuals and small businesses possess fragmented financial histories distributed across multiple providers.
Customer-authorized data sharing may enable financial institutions to develop more complete assessments of financial behaviour.
The BIS notes that open finance can reduce information asymmetries, promote competition and improve financial inclusion by enabling broader use of customer-permissioned financial data. (Bank for International Settlements)
For underserved individuals or smaller enterprises, broader visibility may improve access to financial products that previously relied on limited datasets.
Competition Is Expanding Beyond Traditional Banking
Open banking initially encouraged greater competition within banking services.
Open finance broadens this competitive landscape.
Increasingly connected participants include:
banks
insurers
wealth managers
pension providers
fintech companies
investment platforms
payment providers
Competition increasingly focuses on customer experience, analytics, digital capabilities and integrated services rather than individual financial products alone.
Institutions capable of collaborating across ecosystems may discover new opportunities for innovation and customer engagement.
Embedded Finance and Open Finance Are Becoming Complementary
Open finance also supports the continued growth of embedded finance.
As customer-permissioned financial data becomes more portable, organizations outside traditional banking can integrate financial services more effectively into digital experiences.
Examples include:
accounting software
enterprise resource planning platforms
e-commerce marketplaces
mobility applications
healthcare platforms
These ecosystems increasingly rely on secure data sharing while maintaining regulatory oversight and customer consent.
Rather than operating independently, embedded finance and open finance increasingly reinforce one another.
Data Governance Is More Important Than Ever
The expansion of financial data sharing naturally increases the importance of governance.
Financial institutions continue strengthening controls around:
customer consent
cybersecurity
authentication
data quality
operational resilience
liability management
privacy protection
The OECD emphasizes that effective open finance frameworks require robust consumer safeguards, including clear consent mechanisms, privacy protections and technical standards supporting secure interoperability. (OECD)
Technology alone cannot build trust.
Strong governance remains essential for sustainable adoption.
Standardization Supports Interoperability
As open finance expands across multiple sectors, interoperability becomes increasingly important.
Consistent technical standards improve communication between:
banks
insurers
investment firms
pension providers
fintech companies
regulators
Standardized APIs, common security protocols and shared authentication methods simplify integration while improving customer experience.
Without interoperability, ecosystem complexity could reduce many of the anticipated benefits.
Consequently, industry collaboration continues to play an important role in successful implementation.
Artificial Intelligence Enhances Open Finance
Artificial intelligence is expected to play an increasingly important role within open finance ecosystems.
AI applications may support:
financial insights
fraud detection
customer support
portfolio analysis
credit assessment
cash flow forecasting
personalized recommendations
Broader financial datasets improve AI's ability to generate useful insights while helping customers manage increasingly complex financial lives.
However, responsible AI governance remains essential alongside transparency and explainability.
Businesses Stand to Benefit as Well
Open finance is often discussed from the perspective of retail banking.
Corporate banking also presents significant opportunities.
Businesses increasingly manage relationships with multiple:
banks
payment providers
treasury platforms
insurers
investment managers
Customer-authorized financial data sharing may enable:
integrated treasury management
improved liquidity visibility
automated reconciliation
enhanced financial reporting
simplified financing processes
This broader perspective supports operational efficiency while improving financial decision-making.
Challenges Remain
Despite its considerable potential, open finance also introduces important implementation challenges.
These include:
Consumer Trust
Customers must understand how their data is used.
Data Security
Sensitive financial information requires robust protection.
Technical Standards
Interoperability depends on common protocols.
Regulatory Consistency
Jurisdictions continue developing different implementation models.
Operational Complexity
Institutions must coordinate across increasingly interconnected ecosystems.
Addressing these issues will remain central to long-term success.
The Future of Open Finance
The evolution from open banking to open finance is expected to continue over the coming years.
According to the BIS Innovation Hub, around 70 jurisdictions are exploring open finance through varying regulatory and market approaches, with growing attention on interoperability, digital identity and standardized API frameworks. (Bank for International Settlements)
Future developments are likely to include:
broader financial data portability
enhanced digital identity
AI-driven financial services
cross-sector interoperability
integrated financial planning
cross-border open finance initiatives
ecosystem-based financial products
Open finance therefore represents an ongoing evolution rather than a completed destination.
Conclusion
Open banking transformed how financial institutions share customer-authorized banking data.
Open finance expands that vision by extending secure, permission-based data sharing across a much broader financial landscape.
This evolution has the potential to create more personalized financial services, strengthen competition, improve interoperability and support greater financial inclusion while preserving customer control over financial information.
At the same time, successful implementation depends upon more than technology alone. Secure APIs, robust governance, strong cybersecurity, transparent consent mechanisms and consistent technical standards all remain fundamental.
Financial institutions are therefore moving toward a future in which collaboration increasingly complements traditional competition.
Rather than viewing financial services as isolated products delivered by individual institutions, open finance encourages an ecosystem in which customers, banks, insurers, investment firms and technology providers interact through secure, standardized and customer-controlled data sharing.
As this evolution continues, open finance is likely to become one of the defining foundations of the next generation of digital financial services.
Frequently Asked Questions (FAQs)
What is open finance?
Open finance extends customer-permissioned data sharing beyond banking accounts to include products such as savings, investments, pensions, insurance and loans.
How is open finance different from open banking?
Open banking focuses primarily on banking data, while open finance includes a broader range of financial products and institutions.
Why is open finance important?
It enables more connected financial services, greater customer choice, personalized products and improved financial innovation.
Who controls financial data in open finance?
Customers authorize how and when their financial information is shared with approved providers.
What technologies support open finance?
Secure APIs, digital identity systems, authentication technologies and standardized data-sharing frameworks underpin open finance.
Does open finance improve financial inclusion?
It has the potential to improve access to financial services by enabling broader customer-authorized financial information to support decision-making.
How does open finance benefit businesses?
Businesses may benefit from integrated treasury management, improved liquidity visibility, automated reporting and more connected financial workflows.
What risks accompany open finance?
Privacy protection, cybersecurity, governance, consent management and interoperability remain important considerations.
Is open finance replacing open banking?
No. Open finance builds upon the foundations established by open banking.
What is the future of open finance?
Open finance is expected to continue expanding through broader interoperability, AI-powered financial services, cross-border frameworks and increasingly connected financial ecosystems.
References
OECD – Shifting from Open Banking to Open Finance: Results from the 2022 OECD Survey on Data Sharing Frameworks (2023)
https://www.oecd.org/en/publications/shifting-from-open-banking-to-open-finance_9f881c0c-en.html (OECD)OECD – Open Finance Policy Considerations (2023)
https://www.oecd.org/en/publications/open-finance-policy-considerations_19ef3608-en.html (OECD)Bank for International Settlements (BIS) – Key Considerations for Open Finance – Executive Summary (2025)
https://www.bis.org/fsi/fsisummaries/exsum_23903.htm (Bank for International Settlements)Bank for International Settlements (BIS) Innovation Hub – Open Finance
https://www.bis.org/about/bisih/topics/open_finance.htm (Bank for International Settlements)Bank for International Settlements (BIS) – Opening Doors to Open Finance: Evidence from the International Experience (2026)
https://www.bis.org/publ/bppdf/bispap168.htm (Bank for International Settlements)
