The key to a simpler future: open finance unlocked

Imagine this: as you sip your morning coffee, your financial assistant app gently confirms your bills are paid,  your savings account has been topped up based on last month’s habits, and everything is on track. Later, while booking a holiday, you see a tailored travel insurance offer pop up — no forms to fill, just a single click to activate. By evening, you check your financial dashboard to find everything — spending, investments, upcoming subscriptions, all neatly organized in one place.

This is the world of open finance. A world where financial services don’t demand your attention but quietly work behind the scenes to simplify your life.

This may sound like a near-perfect world but this vision has been in the works for years, quietly taking shape through the foundations of open banking. The concept began as a regulatory push to encourage competition and data sharing. Yet, open banking struggled to gain momentum, not because the idea lacked merit but because it had a branding problem.

At its core, it was a regulation requiring banks to share customer data with third parties, which naturally raised concerns about privacy and security. What often got lost in translation were the benefits: faster payments, smarter financial products, and better control for customers. By focusing on compliance rather than the customer, open banking missed its early chance to inspire. That’s why even today, its potential remains untapped in many markets.

Open banking isn’t just about sharing data, it’s about creating opportunities. By unlocking financial information, it empowers banks, fintechs, and third parties to get creative and innovate in ways that put customers at the center. It enables faster, smarter, and more personalized services that were impossible under the siloed systems of traditional banking. The result? A more inclusive, competitive, and customer-focused financial ecosystem.

Here’s what open banking already makes possible:

• Seamless account aggregation: Users can see all their accounts across banks in one place, simplifying management and giving a clear view of their financial health. Both Brazil’s Nubank and the UK’s Monzo make it possible, offering a sleek, intuitive hub where you can track spending, manage finances, and stay in control effortlessly.

• Personalized product recommendations: By analyzing customer data with consent, FIs can offer tailored loans, credit cards, and savings plans that align with individual needs. Britain’s first digital bank, Starling Bank, provides tailored financial products and Alipay in China recently launched a new AI financial manager for expert-level financial services.

• Faster, hassle-free payments: Instant, direct payments eliminate intermediaries, reducing costs for businesses and consumers. Both N26, a German neobank, and London-based Revolut offer instant payments directly through their apps.

• Enhanced financial inclusion: By connecting underserved populations to alternative credit scoring and banking options, open banking creates new opportunities for those previously excluded from traditional financial systems. bunq, a European neobank, offers multi-currency accounts and IBANs regardless of the account holder's location or residency. 

• Streamlined loan approvals: Instead of manually submitting income statements or bank statements, customers can authorize lenders to access their data securely, speeding up loan approvals. The UK’s savings bank Atom allows customers to authorize secure access to their financial data, significantly expediting loan approval processes.

It’s no surprise that these innovations are largely driven by agile challenger banks in the UK and Europe. With European initiatives like PSD2, PSD3, and the UK’s Competition and Markets Authority (CMA) paving the way, the region has become a hub for open banking adoption. By leveraging modern technology and customer-centric models, these banks are reimagining financial services and driving global transformation.

Open banking holds revolutionary potential, and adoption is accelerating, with global users increasing from 18 million in 2018 to a projected 132.2 million by 2024 (Statista). This surge, fueled in part by the pandemic, underscores the need for traditional banks to actively embrace open banking to remain competitive.

But perhaps the most exciting aspect of open banking is that it’s not the destination — it’s the gateway to open finance. We’re already seeing the beginnings of this evolution, with embedded finance seamlessly integrating banking services into everyday experiences, from e-commerce checkouts to ride-hailing apps. As banks and fintechs collaborate to connect insurance, investments, pensions, and more, open banking is paving the way for a truly interconnected financial ecosystem. Imagine managing insurance policies, pensions, utility payments, e-commerce purchases, mobility services, and travel bookings — all through a unified interface.

One example of open finance in action is Revolut’s ‘Stays & Experiences’, which lets customers book accommodation, exchange money, and access emergency medical and dental insurance, all within the same platform.

A compelling aspect of open finance is how it empowers non-bank entities to deliver financial services. For instance, UK retailer John Lewis provides home insurance underwritten by Royal & Sun Alliance, using customer data to offer personalized coverage. And in the mobility sector, Tesla leverages open APIs to integrate car insurance directly into its app, seamlessly combining financial and non-financial services within the open finance ecosystem.

The scope of open finance continues to grow, extending well beyond fintechs into new and unexpected sectors. Regulatory momentum is building, with initiatives like Europe’s open finance proposal paving the way for broader adoption. At the same time, consumer attitudes are shifting, with 64% willing to share their data for more personalized services, according to Entrust.

Tech giants like Apple and Google are adding further pressure, using their scale and innovation to blur the lines between technology and finance. These developments are driving traditional banks to rethink their strategies and adapt to this rapidly evolving landscape. With open banking payments projected to surpass $330 billion globally by 2027 (Juniper Research), the transformation of finance is moving full speed ahead.

2025 is shaping up to be a pivotal year for open finance. With open banking laying the groundwork, the transition to open finance is accelerating. While this space has so far been dominated by agile challengers and neobanks, traditional banks are far from out of the game. In fact, they hold a unique advantage: established trust, a vast customer base, and a deep understanding of financial services.

The way forward isn’t about mimicking challengers — it’s about leveraging banks’ own strengths. With the right vision and execution, traditional banks can take a leading role in the open finance revolution. But what steps must they take to make it happen?

It starts with building a strong foundation through composability. Composable platforms, designed with microservices and APIs, provide the flexibility and scalability needed to adapt to rapidly changing customer demands. By prioritizing the development of robust APIs and modular architectures, banks can unlock the agility to innovate faster.

Once this foundation is in place, the possibilities are endless. Banks can focus on creating impactful use cases that redefine engagement and drive adoption. From integrating services like mobility and travel insurance to offering seamless e-commerce payment solutions or personalized subscription management tools, these opportunities extend beyond traditional finance.

The ultimate goal? Boosting engagement and maximizing customer lifetime value. With a clear strategy and composable architecture, traditional banks can reclaim their leadership, delivering services that keep them at the center of their customers’ financial lives.

Open banking laid the foundation for open finance, but why stop there? Imagine a future of open data — a world where not just financial information but all aspects of your digital life work together seamlessly. Energy providers, healthcare services, and retail platforms could integrate with financial ecosystems to create a truly interconnected world.

This transformation is inevitable, but its success hinges on collaboration. It will require excellent regulation to ensure security and fairness, coupled with continuous innovation from challenger banks, fintechs, and traditional institutions alike.