Open finance is the idea that a customer should be able to share data held about them by any financial firm, not only their bank, with another provider they choose, and in some cases instruct that provider to act on it. It covers savings, mortgages and other loans, investments, pensions and insurance as well as payment accounts. The data travels through secure, standardised interfaces and only with the customer's permission.
Open finance grew out of open banking, which in Europe and the UK began with the payment-account data and payment-initiation rights in PSD2. It is a policy goal as much as a technology. Some countries (Brazil, India, Australia) built broad data-sharing frameworks from the start, while the European Union and the United Kingdom are widening narrower open-banking rules. The step after open finance, sharing data across every sector of the economy, is usually called open data or smart data.
Open finance in plain terms
Think of your financial life as files kept in separate locked cabinets: one at your bank, one at your pension provider, one at your insurer. Each firm has its own key, and getting a copy of your own file usually means paperwork. Open finance gives you a master permission slip. You can tell a service you trust to look inside particular cabinets, for a set time, and the cabinets open through a standard lock that every firm has to fit.
The useful part is what happens next. A budgeting app could show all your money in one view, a lender could check your real income instead of asking for scanned statements, and a pension tool could show whether you are on track. You can take the permission back whenever you like.
How open finance works
Most frameworks share four building blocks, whatever the country:
- Standard interfaces. Data holders publish an API to an agreed technical standard, so a third party can connect once and reach many firms.
- Consent. The customer grants permission for a defined purpose, a defined set of data and a defined period, and can withdraw it. Financial Data Access rules set out what the consent must say.
- Authentication. The customer proves identity to the firm holding the data, usually with strong customer authentication, rather than handing their password to the third party.
- Authorisation of third parties. Only registered or licensed firms may receive the data, and they are supervised for security and conduct.
Once connected, a third party can pull balances and transactions, which is the job of account aggregation, or, where the framework allows it, start actions such as payments, a role first created for payment initiation service providers.
Open finance around the world
Open finance is moving at different speeds. As of November 2026 the main frameworks are:
- European Union. The European Commission proposed a Financial Data Access Regulation (FiDA) in June 2023 covering mortgages, loans, savings, investments, pensions and non-life insurance. Trilogue negotiations between the Parliament, Council and Commission were still under way in 2026, with disputes over scope and whether large technology "gatekeepers" should get access.
- United Kingdom. Open banking was mandated for the nine largest banks by the Competition and Markets Authority from 2018. The Data (Use and Access) Act 2025 gives the government powers to set up smart data schemes, including in finance.
- Brazil. The central bank launched open banking in phases from February 2021 and renamed it Open Finance as it widened to investments, insurance and pensions.
- India. The Reserve Bank of India created the Account Aggregator framework in 2016, under which licensed consent managers move data between banks, securities, insurance and pension regulators' firms.
- United States. The Consumer Financial Protection Bureau finalised a personal financial data rights rule under Section 1033 of the Dodd-Frank Act in October 2024, but a federal court enjoined enforcement while the Bureau reconsidered it, and it was being rewritten in 2026.
Uses and benefits
Supporters argue that open finance lowers switching costs and strengthens competition. Common uses include:
- Better lending decisions. A lender can read real cash flows to support underwriting, which helps people with thin files at the credit bureau.
- Whole-of-wallet views. Households see accounts, pensions and investments together, which supports a realistic budget.
- Faster onboarding. Firms can confirm income and ownership of accounts during KYC checks and bank account verification.
- New services. Embedded finance providers and fintech firms build tools on top of data they could not previously reach.
Risks and criticism
Open finance raises hard questions. Wider sharing increases exposure to data breaches and fraud, so data security and liability rules matter. Privacy advocates warn that consent can become a box-ticking exercise and that pension or insurance data could be used to price people out of products; GDPR and data privacy law set limits but do not answer every case. Banks and insurers point to the cost of building interfaces and argue they should be paid for access, a point at the centre of both the FiDA and Section 1033 debates. Others worry that the largest technology platforms, rather than small challengers, will gain most from the data.