The Steady Rise of Open Finance

13 December 2024

Key research questions

Which countries have a framework for open finance live or in development?
What are the three ways banks can monetise open finance?
What should banks do next to prepare for the future?

Abstract

What a difference a decade makes. Back in the mid-2010s, the concept of open banking emerged as a way to increase competition between banks and fintechs in Europe. In the intervening years, two unexpected things occurred. Firstly, open banking has become adopted globally, with frameworks in place or being developed in over 60 countries. More significantly, these frameworks are now moving beyond the narrow scope of open banking to become something much broader: open finance. This shift has the potential to be truly transformative for the industry, creating both significant opportunities and risks for banks.

The industry has learned many lessons about how to unlock the potential benefits of open finance. The most important is the understanding that it is not an end or an outcome in and of itself. Open finance is best considered as a series of inputs or data ‘ingredients’ that can be used to variously support efficiency gains, product development, and even support entirely new commercial models for banks.

The list of improvements or enhancements that open finance can support is considerable, but they all fall into one of three categories:

Enhancing existing workflows to improve customer experiences and lower costs
Increasing customer engagement and retention through enhanced digital propositions
Capturing new revenue opportunities.

The individual use cases in each of these categories can be delivered singly, or in any sequence or combination. This is not theortical either, and a growing number of banks are actively taking advantage of these opportunities to improve their products, services, and experiences. While much of the activity to date has been relatively small-scale, there has been a steady increase in the number of institutions that now have some form of open banking or open finance-supported use case in production.

In its annual Dimensions survey, Celent has been tracking the way that banks are using open finance to support product development. In 2023, 12% of banks reported they were actively using open banking or open finance for these purposes. This figure doubled to 24% in 2024, underpinned by strong growth in all regions. These increases reflect both the expansion and growing maturity of many open finance frameworks, as well as the benefits it has supported. The rate of adoption is expected to increase further in 2025, to reach somewhere in the range of 35-38% of the industry.

Looking at the progress the industry has made with open finance, two things become clear. The first is that the industry will only see greater openness and increased data sharing over time. The second is that, despite the steps made so far, banks have barely begun to scratch the surface of the potential opportunities to monetise open finance. These are considerable and will only grow as the maturity and scope of these frameworks increases. For banks and vendors, now is the time to ensure you have the plans in place to capitalise.

Figure: Proportion of Banks in Tiers 1-6 with at Least One Open Banking or Open Finance Use Case in Production, 2023-2025