Open Banking
Financial Services
Open Banking
Financial Services
February 21, 2023
8 Min

Open Finance: Everything You Need to Know


Open Banking, Open Finance, and Open Data are all terms sparking conversation amongst banks and FinTechs. While Open Banking is more understood, Open Finance is harder to pin down. Open Finance, or the extension of the benefits of Open Banking, provides users access to a wide range of financial services anywhere, anytime. Some of those services include banking services, investing, insurance, and more. It eliminates the traditional financial inclusion barriers, enabling users to access the same services as larger financial institutions without the same costs, requirements, or restrictions. Because it provides consumers with increased flexibility, convenience, transparency, and control over their finances, Open Finance is gaining traction in the banking and FinTech world.

What Is Open Finance?

In order to understand the applicability of Open Finance, you have to understand Open Banking. While Open Banking refers to the sharing of data among financial institutions and third-party providers (TPP), Open Finance refers to the use of said data to offer personalized financial services. Although similar in practice to Open Banking solutions, Open Finance is the next step and allows for more consumer control over who has access to their financial data and what they do with it.

When consumers and businesses utilize Open Finance solutions, they can build more personalized experiences and change how consumers interact with financial products and services. It also helps them make better decisions based on the data insights they can gain through Open Finance services. This supports financial wellness since consumers can take more accountability for their finances.

Other ways that you can use Open Finance include mitigating fraud and risk, as well as enabling new business models. As merchants see how consumers utilize the data, they can create products and services that better fit those needs and revolutionize the industry.

What Is the Difference Between Open Finance and Open Banking?

As mentioned, Open Finance is the next step of Open Banking solutions. Open Banking is a structured and secure way of for financial institutions to share financial data with other financial institutions or third-party providers through Open Banking APIs.

Open Finance broadens the benefits of Open Banking by applying its benefits to common financial tools and services. Bank-verified data can be used to extend the scope of the Open Banking model to and make financial processes more tailored and efficient. In turn, this makes traditionally tedious financial processes like investments, pensions, mortgages, insurance claims, and more, increasingly efficient, accurate, and personalized.

Stay in the know

Get exclusive insights and updates on all things Open Banking and Payments.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Relevant pages and resources

Open Banking
June 6, 2024
5 min
How Open Banking Makes Consumer Account Verification Easy
Financial Services
Open Banking
June 5, 2024
7 Benefits of Real-Time Payments That Can Fuel Business Growth
Financial Services
Open Banking
June 4, 2024
8 minutes
3 Ways Open Banking Can Unlock Growth in Financial Services