Open finance widens data sharing beyond open banking

Open banking enables customers to share payment account data with third parties by consent. Open finance applies that consent model across a wider set of products, including savings, investments, pensions, insurance and lending. The Cambridge Centre for Alternative Finance reports 95 jurisdictions with some form of open banking or open finance framework on paper.

Of those 95 jurisdictions, 60 have adopted rules for open banking and 16 have passed laws or regulations that implement open finance. Frameworks are common on paper; statutory implementation of cross-product data sharing is limited.

Open banking typically covers current accounts and the data those accounts generate. Open finance extends permissioned access and action initiation to multiple financial product types, allowing third parties to read data and, where permitted, initiate account-to-account payments across different products.

Observers point to regulatory structure as a major factor in the implementation gap. Open banking projects have often sat under a single regulator responsible for banks and payments. Open finance involves authorities that oversee pensions, insurance and investments, and those agencies frequently lack explicit legal powers or formal mechanisms to require data sharing across sectors.

Industry participants report that the technical tools for consented, account-to-account money movement and cross-product data sharing exist and have been built by some infrastructure providers. These participants identify coordination among regulators and other stakeholders as a persistent obstacle to wider implementation.

Jurisdictions where a single central authority covers banks and payments have tended to move from paper frameworks to operational open banking faster. Where regulatory responsibilities are dispersed across multiple agencies, the transition to open finance has been slower.

For firms that offer products across several parts of a customer’s financial life-lenders, asset managers, insurers and large retail banks-consented access to cross-product data and the ability to move funds between accounts on a single rail are elements that can be implemented once legal frameworks and industry standards are in place.

Implementation timelines differ by country depending on who holds regulatory power and how quickly lawmakers approve enabling legal changes. The current landscape combines broad policy interest with limited operating capability for cross-product data sharing and payments.