Preparing for Open Finance: Strategic Priorities for UK Financial Institutions

This article summarises key insights shared by Marie Walker, Open Futurist at Raidiam, during Norton Rose Fulbright’s recent event on the Future of Open Finance. Speaking alongside Helene Oger-Zaher from the Financial Conduct Authority (FCA) and Rob Haslingden from the Centre for Finance, Innovation and Technology (CFIT), Marie explored how Open Finance will transform the UK financial sector – expanding the role of third parties and requiring new approaches to infrastructure, trust, and strategic delivery.

Why Open Finance, and Why Now?

Open Finance is at a pivotal moment in the UK. Building on the success of Open Banking - which has already delivered tangible benefits to millions of consumers and businesses - the UK is now preparing for the next phase of data-driven innovation in financial services.

Key public bodies are actively shaping this evolution. HM Treasury and the Financial Conduct Authority (FCA) are progressing Open Finance through the Smart Data initiative and the Joint Regulatory Oversight Committee (JROC). The Data (Use and Access) Act (2025) will give regulators new powers to mandate Smart Data schemes across sectors – including finance, energy, and telecoms.

Together with the UK Treasury’s upcoming consultation and the FCA taking a more active oversight role, these developments are designed to unlock even greater consumer empowerment, competition, and innovation across the financial ecosystem.

The Next Evolution: From Open Banking to Open Finance

Open Finance is poised to reshape the UK financial sector, building on the groundwork laid by Open Banking. While Open Banking has enabled read-only access and basic payment functionality, Open Finance will extend these capabilities, granting third parties the authority to manage accounts on behalf of customers, including the ability to close accounts with proper consent. This marks a fundamental shift in the relationship between customers and their financial institutions, requiring banks and other providers to rethink their strategies, infrastructure, and approach to customer engagement. Crucially, Open Finance is about giving consumers more control and choice over their financial data and services, making it easier to access tailored products, switch providers, and improve financial wellbeing. 

The Consumer Benefits of Open Finance

Open Finance offers consumers a range of benefits, these include:

• Greater Control: Consumers can securely share their data with trusted third parties, enabling more personalised financial advice, better budgeting tools, and easier account switching.
• Improved Financial Wellbeing: Open Finance helps people make better financial decisions, reduce unnecessary fees, and access new savings and investment opportunities.
• Enhanced Competition: By lowering barriers to entry, Open Finance encourages innovation and competition, leading to better products and services for everyone.
• Financial Inclusion: New services can be designed for underserved groups, supporting financial resilience and inclusion.

Expanding Third-Party Capabilities and Shared Risk

The transition to Open Finance will empower third-party providers (TPPs) with unprecedented access and control. TPPs will be able to perform complex account management tasks, such as closing accounts or making decisions on behalf of customers, even without a direct relationship with the bank. This expanded access introduces new challenges around verifying the legitimacy of third-party requests and ensuring customers are promptly notified of significant account activities. Real-time alerts and cooling-off periods will become essential safeguards.

With these new powers comes a redistribution of risk and liability. Responsibility for customer outcomes will be shared among banks, TPPs, and data aggregators, necessitating enhanced coordination for dispute resolution and incident response. The broader attack surface created by expanded API access increases cybersecurity risks, making professional indemnity insurance and robust threat detection critical for all participants.

Infrastructure and Trust: The Foundations of Open Finance

To support the demands of Open Finance, financial institutions must invest in modern, scalable infrastructure. This includes enhancing APIs beyond current standards, enabling real-time data sharing, and implementing scalable authentication systems to securely manage increased third-party access. Advanced consent management tools will be required to give customers granular control over their data, while data minimisation practices – such as strong encryption and detailed audit trails – will help maintain privacy and compliance.

Trust will be the cornerstone of this new ecosystem. Institutions must prioritise transparency, providing clear disclosures about third-party access and making it easy for customers to withdraw consent at any time. Real-time notifications for account activities and comprehensive, multi-party dispute resolution processes will help build confidence. Fraud prevention will also need to evolve, leveraging advanced detection methods across multiple access channels.

Consent, Revenue, and Competitive Positioning

Consent management will remain central to Open Finance. Customers must clearly understand what data they are sharing and with whom, and only the necessary information should be accessed, in line with GDPR requirements. Maintaining consumer confidence will depend on robust, user-friendly consent processes.

Open Finance also presents new revenue opportunities and competitive challenges. Financial institutions can develop premium API services and value-added partnerships, but must balance these opportunities with the risk of disintermediation as traditional banking relationships become less central. Collaboration with fintechs and careful data monetisation strategies will be essential, as will efforts to retain customers in an environment where switching providers is easier than ever.

At Raidiam, we’ve seen first-hand how Trust Frameworks and standards-based infrastructure can enable scalable, secure ecosystems – most notably in Brazil’s Open Finance implementation, where over 17 million consents have been safely managed.

→ Related Read: Open Finance Brasil: Raidiam’s Role in Secure Financial Data Sharing

Real-World Applications and Global Innovation

Open Finance is already driving innovation in markets around the world. Examples include:

• Portfolio management: unified views of pensions and investments, automated optimisation, holistic financial planning.
• Insurance: dynamic, behaviour-based pricing and real-time risk assessment.
• Financial advice: more comprehensive, predictive, and proactive guidance by aggregating data across all of a customer’s accounts.
• Pension and retirement planning: automated contribution optimisation and real-time dashboard updates.
• SME lending: enhanced credit assessments based on real-time cash flow data, embedded finance solutions, and faster lending decisions.
• Cross-border payments: direct account transfers, multi-currency management, and integrated international banking.

While many of these innovations are being pioneered internationally, the UK is well-positioned to benefit as Open Finance matures and regulatory frameworks are finalised.

Across these diverse applications, several common themes emerge: the aggregation and real-time analysis of financial data, automation of complex decisions, and the integration of services across previously siloed products and institutions. These trends are underpinned by the need for robust consent management, strong security, and transparent customer communication.

→ Related Read: Empowering Governments to Build Secure, Scalable, and Interoperable Data Ecosystems

Strategic Recommendations for Financial Institutions

To prepare for Open Finance, financial institutions should:

• Assess current capabilities and identify priority use cases.
• Develop partnership strategies, implementation roadmaps, and allocate resources to technology and innovation.
• Establish a presence in high-opportunity areas and engage proactively with evolving regulatory requirements to maintain competitive positioning.
• Foster a culture of innovation by supporting cross-functional teams that combine technology, risk, legal, and business expertise.
• Invest in secure, scalable API infrastructure.
• Actively participate in shaping governance frameworks and industry standards, not just comply with them.
• Collaborate with fintechs to accelerate innovation and reduce time to market.
• Communicate transparently with customers about the benefits and protections of Open Finance, building trust and driving adoption.
• Prioritise robust, real-time communication and dispute resolution to maintain customer trust.

Final Thoughts

Open Finance is not merely a regulatory requirement – it is a strategic opportunity. The UK’s leadership in Open Banking has already delivered real benefits to consumers and businesses, and Open Finance promises to go even further – empowering people, driving innovation, and supporting economic growth.

A key message from the event was don't wait for the regulator, regulation is coming but it takes time. The UK financial institutions that act now will lead the next wave of financial innovation, deliver greater value to customers, and securing their market share in a rapidly evolving ecosystem.

Open Finance is not just a compliance exercise – it is a strategic opportunity to lead, innovate, and build lasting customer trust.

Preparing for Open Finance? Raidiam helps financial institutions design secure, standards-based ecosystems that enable innovation and compliance. Get in touch today.