What is Open Finance?

Your financial data will not be limited to the one company where you are a customer – you will have control over your data and be able to choose how and when you want to access and manage your information and make financial decisions. This will be made possible by the use of API (application programming interfaces), which are computer programs that let different IT systems communicate and share information in real time.

Open Finance is bound to make life easier for both personal customers and corporate customers and result in a better overview and a wider range of services as well as make it easier to both make financial decisions and execute them.

What is the difference between Open Banking and Open Finance?

Open finance is the future successor to Open Banking.

Open Banking is to a large extent built on the legislative foundation of an EU directive called PSD2. Consequently, it mainly covers payment initiation and account information services. Although Nordea and some other banks are already offering financial services embedded in non-banking applications, Open Finance is a broader concept that will extend the scope of shared  customer information to areas like savings, investments, mortgages, lending, pensions and insurance.

The legislation behind Open Finance, however, is not yet in place but a proposal was published by the European Commission on 28 June 2023.

When will Open Finance become a reality?

In many ways Open Finance is a concept of the future, and it is still to be seen what exactly it will entail. However, some parts of Open Finance are already here. Banks don’t necessarily want to wait for legislation before they provide services which enable customers to share and use their data in various channels, and some banks are ahead of the game.

Nordea, for instance, already offers various services which are likely to be within the scope of the expected Open Finance legislation. These services are targeted towards corporate customers who wish to use their bank data in their accounting or ERP systems. They are called Premium APIs and can be found at Nordea API Market.

What will Open Finance mean to customers?

Open Finance will continue the development initiated by open banking. It will benefit both personal and corporate customers by making it easier for them to access financial products and services in a variety of third-party services and platforms, such as accounting systems, fintech apps for investing, mortgage broker platforms, financial advisory services and more.

Imagine a future where customers will have control over their data and be able to choose how and when they want to access and manage it, whether it be through their mobile banking app or other tools they use in their daily lives.

The expected Open Finance legislation will facilitate innovation and new product offerings by any interested party. Ecosystems will emerge where both banks and non-banks compete and collaborate on offering great customer experiences through new interfaces, personalisation options and insights.