Navigating the evolution of Open Banking and Open Finance

Monday 4 March 2024 08:58 CET | Editor: Vlad Macovei | Interview

Amit Mallick, Global Open Finance Lead at Accenture, explores the essential factors and strategies vital for the success of Open Finance initiatives.


Amit Mallick, Global Open Finance Lead at Accenture, explores the essential factors and strategies vital for the success of Open Finance initiatives.


Which UK fintech initiatives have demonstrated the greatest success to date and hold the utmost significance in the transition from Open Banking to Open Finance?

Firstly, the formation of the Open Banking Implementation Entity (OBIE) in 2016 — a regulator, designed to work like a fintech, that’s played a central role in driving standardisation and adoption.

Secondly, there’s Yolt, a consumer-facing personal finance management app launched by ING Bank in 2017 that garnered more than half a million new customer accounts in just a few months. Although it was shut down in 2021, it is considered the original disruptor in the world of Open Banking.

As the market has evolved, we’ve seen the emergence of large fintechs that could be classified as Open Banking ‘unicorns’, providing easy access to the Open Banking ecosystem such as payments network TrueLayer and technology platforms Plaid and Tink.

More recently, traditional financial and government institutions have started taking an interest in Open Banking. The UK’s HMRC has integrated Open Banking into its systems, with GBP 123 million in self-assessment payments powered by Open Banking being made via its app between February and October 2022. 

Neo banks like Starling and Monzo are driving new experience use cases through their apps, as well as large incumbents such as Tesco which has launched a digital wallet where Open Banking and payments are a seamless part of the customer journey.


How will the role of traditional banks evolve as Open Finance gains widespread adoption?

There are two primary business models. The first is Banking-as-a-Service, in which banks offer a range of banking services through APIs, beyond what is mandated by legislation and regulation — for example, corporate APIs, treasury APIs, and payment APIs. A more recent evolution is embedded finance and embedded payments, focused on the front-end customer payments element where the most widely adopted example is Buy Now, Pay Later.

The second is Banking-as-a-Platform, where banks are aggregating a range of APIs from different providers to provide an end-to-end solution for customers to satisfy different needs. This may be a credit or mortgage solution, personal finance management, or apps to drive sustainable behaviour patterns.

Accenture’s Reinventing Commercial Payments Survey 2023, found that 75% of banks are prioritising investments in embedded payments solutions to improve the personalisation of the payments experience. Additionally, 65% of banks cited the development of industry-specific Open Banking solutions as a top driver for investing in the modernisation of their legacy payments infrastructure.


What are some promising and successful use cases within Open Finance?

It is important to understand that Open Finance is an evolution of Open Banking. Newer use cases include:

  1. Confirmation of Payee is a service used by most UK banks to check account numbers and customer names when a payment is made, helping to prevent mistakes, and tackling fraud. 

  2. Corporate and Treasury APIs are a particularly successful suite of services used by large banks for corporate clients. They are used in cross-border money transfers, liquidity and cash management, and complex payment instructions.

  3. Credit decisioning for retail customers, where Open Banking data is used to determine the creditworthiness and affordability of applicants. 

  4. Variable recurring payments could be seen as the ‘payments super-API’. This is still in the early stages of development but is a potential candidate to replace all existing payment services such as standing orders, debit orders, and even one-click payments.

  5. Bank provided Digital identity equivalent to log-in services provided by big techs for credential verification. Lloyds Bank recently launched Smart ID, which helps its customers verify their identity parameters in real-time.


Will players such as fintechs, neobanks, and bigtech companies likely surpass incumbent institutions in the Open Finance landscape, or will traditional players retain their market share?

Open Finance is blurring industry lines. Increasingly, non-banking players will deliver banking services and integrate ecosystems through APIs. Banks will also expand their value chain, offering new value-added services around key life moments. This will evolve into a new ecosystem with new value pools for all participants — for example, with fintechs and neobanks driving innovative experiences, bigtechs driving mass adoption and banks providing the funding and technology infrastructure.

All players must work as a collective group rather than individually. The new Open Finance landscape offers new opportunities for new players while enabling traditional players to maintain their roles.


How can data security and privacy be ensured in Open Finance?

Maintaining high levels of data security is critical for driving trust and adoption by both consumers and businesses – for example:

  1. The creation of frameworks such as the Open Banking directory is key to establishing trust.

  2. Modern consent management is required so users can easily understand what data is shared and how it is used. Users should be able to view all the consents they’ve provided in a central repository. 

  3. Any new Open Finance product should be designed so that only the minimum amount of data necessary for the intended purpose is collected.

  4. Encryption of data is key to the maintenance of security and privacy. 

This editorial piece was first published in the Open Finance Report 2023. We encourage you to download the report and find out the latest trends and developments in the world of Open Banking and Open Finance, as the road to Open Data continues.

About Amit Mallick

Amit has 20 years of consulting and technology experience in the financial services industry. He currently leads Accenture’s Open Finance business globally and has strong subject matter expertise in Open Banking, PSD2, and the associated API economy. 



About Accenture

Accenture is a leading global professional services company that helps the world’s leading businesses, governments, and other organisations build their digital core, optimise their operations, accelerate revenue growth, and enhance citizen services—creating tangible value at speed and scale. We are a talent- and innovation-led company with approximately 733,000 people serving clients in more than 120 countries. 

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Keywords: Open Banking, Open Finance, banks, fintech, report
Categories: Banking & Fintech
Companies: Accenture
Countries: World
This article is part of category

Banking & Fintech


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