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The Second Payment Services Directive (PSD2) and Open Banking regulations in the UK required financial institutions, on their customers’ request, to share their customer’s payment account data with third party providers such as fintechs. Open Finance is an industry led initiative looking to increase the scope of financial data sharing beyond payment accounts.
This would unlock far more fintech products and services for consumers and small to medium sized enterprises (customers) than is possible today, with just PSD2 and Open Banking. One such example is providing customers a single view of all their finances. In order to do this holistically, third party providers also need access to non-payment customer accounts data such as data from savings, mortgage and investment accounts. Open Finance could enable this and many more fintech products and services, thus creating far greater value for end customers.
Open Finance could ultimately create a greater balance of power between financial institutions and their customers and could put customers in greater control of their financial lives than is possible today.
However, to realise this grand vision, lessons from such past initiatives need to be taken into account to ensure the success of Open Finance. Here are some of the top considerations in that respect:
Such a customer and industry led approach would ensure customers truly benefit from Open Finance and minimal effort is wasted by financial institutions in making it happen.
The views expressed in this blog are solely my views and not of any other organisations.
Haydon & Company Limited | rishi.chauhan@haydonandco.com
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
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