As open banking evolves to become open finance, we examine some of the current and potential uses of this financial innovation.

We also look beyond open finance to explore the wider economic opportunities offered by smart data.

Read our eBook – ‘From open banking to open finance’

Journey to open finance

In the six-plus years since open banking became a regulatory requirement in the UK, there are now more than nine million users of this financial innovation. Millions of consumers use open banking-enabled apps and products to help them budget, build their savings, and manage debt.

In addition, 750,000 small businesses benefit from real-time insights on their cash flow, and embedded finance links to help them get paid faster – enabled by open banking connections with their accounting software.

Yet while open banking has made significant progress, its benefits have been limited to payments, current accounts, and credit applications.

Open finance will extend these benefits to mortgages, pensions, investments and savings, while applying the same data sharing principles – smart data – to other economic sectors, will lead to ‘open everything’.

What can it deliver?

What’s driving the journey?

In January 2023, the CMA announced the completion of the open banking Implementation Roadmap. As we plan for a possible transition to a Future Entity, OBL now looks to the Joint Regulatory Oversight Committee to build a sustainable and competitive ecosystem that will unlock the full potential of open banking.

The UK government has committed to deliver smart data legislation through the Data Protection and Digital Information (DPDI) Bill in the next session of Parliament.

The legislation will allow the government and regulators to extend the benefits of open banking and to mandate new smart data schemes in other sectors, including energy, telecoms, pensions, retail, mortgages, transport and insurance.

The aim is to create competition in those sectors and deliver better outcomes for consumers and small businesses, helping to build a world-leading open data economy.

Compare prices and tariffs

Address the ‘loyalty penalty’

Facilitate one-click switching

Deliver a data-driven economy

Smart data – ‘open everything’

The government’s smart data legislation aims to help consumers and businesses navigate complex markets. It will also help users to compare prices and find cost-effective tariffs for essential utilities such as energy, water, mobile phone packages, and broadband. This could potentially save hundreds of pounds on bills, and address the ‘loyalty penalty’ – the difference between what loyal and new consumers pay for the same service – that many customers face when trying to change providers.

It could potentially facilitate the switch to a cheaper or more relevant product in a single click. For example, downloading mobile phone consumption data to find a better package and have the price comparison site or provider complete the transfer.

With the proper safeguards and regulatory framework, smart data can transform the way we manage our entire economic lives, promoting greater financial well-being, and unlocking the benefits of a truly data-driven economy.