The Financial Conduct Authority (FCA) has published its vision for open finance, focusing on helping small businesses and consumers to access better products through the secure sharing of their data with finance firms.
Regulators need to act if the UK is to retain advantages in the sector. At an event earlier this year, Ron Kalifa, former CEO of fintech giant Worldpay, who carried out the HM Treasury-commissioned review of the fintech sector, warned against complacency.
During his speech at the Innovate Finance event in February, Kalifa said the UK is losing its leadership in open banking, having “laid the rail track, but hesitated to run the trains”.
Open finance – as open banking’s next phase is often described – will see firms use application programming interfaces (APIs) to share banking data across more services, such as mortgages and loans.
At the February event, Kalifa said the UK roadmap for open finance is “still waiting to land” and pointed to countries such as Brazil and India as examples of who are “moving ahead”.
The latest announcement by the FCA reveals it will engage with finance firms, consumers and other regulators through the year to “progress plans as quickly as possible”, including developing open finance use cases. It outlines how consumers and businesses could be given greater control over their financial data to help them get better deals.
David Geale, executive director for payments and digital finance at the FCA, said: “Open finance has the potential to transform how people interact with financial services. By giving consumers and businesses more control over their own financial data, we can help them access credit, secure better deals and receive more customised support – while fuelling innovation, competition and supporting economic growth.”
Innovate Finance stressed the importance of open finance to the UK, with its chief strategy officer Adam Jackson saying: “Just as open banking has sparked the growth of many UK fintechs, so too can open finance power a new wave of innovation.”
He added that through using high-quality data in a way that secures consumer trust, open finance can be a foundation for widespread adoption of agentic AI: “We support collaboration between industry and the FCA to deliver the roadmap at pace, enabling agreement on priority use cases and datasets, and appropriate regulatory action to open these up to competition and innovation.”
The FCA said it will work with the government on a regulatory framework for open finance by the end of 2027, but added that firms will be supported to introduce open finance products sooner “where they are already able to access data and appropriate permissions are in place”.
Research by Open Banking Limited and EY suggests that the economic impact of open banking and open finance combined could reach £7.4bn per year in five years.
It was 2017 when the Competition and Markets Authority’s Retail Banking Market Investigation Order meant UK banks were required to implement open banking regulations, which led to the development of application programming interfaces (APIs) to give consumers more control over their bank accounts.
The end goal was to increase competition in a retail banking sector dominated by big financial services companies. Customer banking data is shared by the industry through APIs, with customers’ permission, enabling businesses to offer tailored products. Open finance will see firms use APIs to share banking data across more services.
