Trustly, Mambu, CFIT, Airwallex and Payl8r on Overcoming Open Finance Barriers

Open finance aims to give third-party providers access to a wider range of financial data, extending beyond just banking services. While it holds promise for more personalised products and improved financial inclusion, its adoption has been slower than expected. Several key challenges, including privacy concerns and a lack of strong advocacy, continue to stand in the way.

To explore the challenges preventing the widespread adoption of open finance, we reached out to industry leaders for their insights. They share their views on the key barriers holding open finance back and discussed potential solutions, from improving data security and raising consumer awareness to fostering better collaboration between financial institutions and third-party providers.

Advocacy gaps are holding back progress

Christopher G. Fox, PhD, founder of Ideas-Led Growth

One of the biggest gaps in the industry is the lack of clear advocacy for open finance, says Christopher G. Fox, PhD, founder of Ideas-Led Growth, a consultancy for financial companies. He argues that many financial institutions and non-banks are not being adequately persuaded of the benefits of open finance.

“Too many providers take it on faith that open finance tools are worth adopting,” Fox says. “They don’t have strong comms and marketing strategies that persuade top decision makers to consider or embrace open finance.”

Without targeted advocacy, Fox believes open finance will remain “stuck in the realm of theory and buzzwords” rather than becoming a mainstream reality.

“Providers need to invest in robust thought leadership strategies that specifically address the needs of traditional banks or other enterprises.”

Data privacy concerns remain a major barrier

Mark Geneste, chief revenue officer at Mambu

Mark Geneste, chief revenue officer at SaaS cloud banking platform Mambu, points to data privacy as a key issue holding back the adoption of open finance. As cyber threats grow, many consumers are increasingly cautious about sharing financial data. “Many individuals are worried about the safety of their data, preventing the widespread adoption of open finance,” he says.

To address these concerns, Geneste suggests that financial institutions should partner with fintechs that comply with global data protection laws. This, he believes, will help restore consumer confidence. “By partnering with a true SaaS banking platform, fintechs can ensure their platforms are compliant with global regulatory standards,” he adds.

Geneste also notes that a lack of consumer awareness remains another significant obstacle. “With many consumers unaware of what open finance is or how it will benefit them, it is clear to see why adoption has stalled.” He points to Mambu research showing that 52 per cent of consumers are unfamiliar with open banking technologies, stressing the need for increased awareness campaigns to drive adoption.

Fragmented data limits open finance potential

Ezechi Britton MBE, CEO of the Centre for Finance, Innovation and Technology (CFIT)

The fragmented nature of financial data stands as a major obstacle to unlocking the full potential of open finance, according to Ezechi Britton, CEO of the Centre for Finance, Innovation and Technology (CFIT).

He highlights how the lack of collaboration between data holders and financial service providers hampers both economic growth and consumer choice.

“Fragmentation proves a significant drag on economic growth and consumer choice,” Britton says, pointing to the inefficiencies that arise from disconnected data.

Research conducted by CFIT’s coalition on open finance estimates that better access to personal financial data could deliver a £30.5billion boost to the UK economy. To achieve this, Britton explains the importance of secure data-sharing mechanisms.

“The success of open finance hinges on secure and ready access to financial data, and widespread adoption relies heavily on building trust and confidence in consent and data security. A crucial part of our industry-wide coalition’s work on open finance was to develop a prototype authentication flow and consent hub, demonstrating how users could easily complete authentication with several organisations and understand what data they are sharing, for how long, with whom and how they can revoke their consent easily.”

Lack of understanding and data protection concerns

Christo Christodoulou, head of strategic partnerships, EMEA, Airwallex,

For Christo Christodoulou, head of strategic partnerships, EMEA at global payments platform Airwallex, the lack of awareness surrounding open finance – especially its benefits and implications – is a significant barrier to adoption.

“Open finance is the next step up from open banking, but we need consumers, businesses, and banks fully onboard for it to succeed,” he says. Without a clear understanding of how open finance can enhance financial services, adoption will remain limited.

Data protection concerns also weigh heavily on the minds of potential users. Many are reluctant to share their financial information due to fears of security breaches.

Christodoulou also comments: “With strong security frameworks and policies for handling this sensitive information enforced, it can remove the risk and ensure data protection throughout any transfer.” Building trust through transparent security measures is essential for the success of open finance.

Regulatory challenges further complicate the situation. “We haven’t seen the same level of regulation that we saw in open banking yet,” Christodoulou notes, highlighting the importance of not over-regulating the sector while ensuring adequate standards and protection for businesses and consumers.

A balanced approach to data 

Samantha Fogerty, COO. Payl8r

“Open finance can be a game-changer, but its true value lies in helping lenders make better decisions, not drowning us in data,” says Samantha Fogerty, COO of UK-regulated buy now, pay later entity Payl8r.

She suggests that while open finance provides a fuller picture of consumers’ financial situations, it can also reveal vulnerabilities, such as irregular income or unexpected commitments, which may lead to more cautious underwriting decisions.

Fogerty believes that lenders need to strike a balance in how they use open finance data.

“We need to be smart about how we use this data, ensuring our decisions are fair and responsible,” she explains. “That might mean using open finance data for more complex, higher-value credit products where it adds genuine value, but keeping things simple with open banking data for straightforward loans to avoid over-complicating the process.”

Speed and efficiency are key to adoption

Oscar Berglund, chief business development officer at Trustly

When it comes to improving open finance adoption, the user experience is critical says Oscar Berglund, chief business development officer at Swedish open banking company Trustly. He notes that while open banking usage is growing, traditional payment methods still dominate in key areas.

“To drive more widespread adoption, banks and other data holders should make a conscious effort to further improve the quality and speed of the user journey,” he says.

Real-time payments are also crucial. Berglund believes that open finance “relies on things happening in real-time,” comparing it to the immediacy expected in email and text messaging. “I have seen some people suggest that instant payments should be made slow again, and I hope this does not materialise,” he also adds, pointing out that delays could significantly slow adoption.

“Open finance and open banking rely on things happening in real-time, just as email and text messages are based on getting to the recipient straight away, not three days from now.”

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