This session was moderated by Richard Rosenholtz, chair of the Nordic RegTech association. The panellists were:

• Klas Malmen, Innovation Hub at Finansinspektionen;
• Julija Varneckiene, COO at CapitalBox;
• Kaido Saar, CEO at Mifundo; and
• Torbjorn Sandahl, Moank Fintech Group.

The group agreed that open finance is generally a welcome concept but its worth is all related to execution and it is not perfect for all.

There is still risk there that needs to be controlled. Where is this data going? And who is using this and how as finance becomes more open.

Education is key in this moment. Not only is education vital, but so is technology and infrastructure enabling frictionless movement. The EU’s biggest challenge is to encourage and enable movement of data cross-border to replicate what the US can offer state to state. The challenge is that there is no recognition of identity, credit or trust cross border at the present in the EU.

Surveys related to the revised Payment Services Directive (PSD2) in 2023 indicated that many consumers were either not using open finance or unaware of it, or were using it and were equally unaware they were using it!

30% of Swedes use it where it is actually embedded in another service (eg open banking). The fact that extensions into insurance and securities is unregulated has limited the scope here significantly.

Under PSD2 consumers consent to the sharing of their data but very few understand what they are sharing. If the major Nordic banks embrace it, its acceptance as well as wider knowledge of it will accelerate. Some of the banks are sharing the available data in a very qualitative way, but many are just doing it to tick the regulatory box. Approximately 10-15% of Nordic bank customers are foreigners and they are much better serviced by private credit bureaus than by central banks.

The panel felt that Sweden is a frontrunner in the adoption and delivery of open finance. This lacks the same familiarity in the rest of the EU where data sharing is not as trusted (the suspicion often is that the data will go to third countries or that data subjects will be sold services they do not want). But Sweden has been effectively “doing” open finance for 10 years and can stay ahead of the regulations while delivering on the opportunity.

The discussion turned to the opportunities beyond the obvious one which was seen as the growth of payment disruptors. Regulation has not shifted to allow advances within sectors such as insurance. Legal challenges exist that limit the cross border and international potential here.

Open finance offers many more opportunities so the consumer gains knowledge in order to be in a stronger position to negotiate. Data gets shared under PSD2 and via API, but many still adopt the unregulated approach to screen-scrape data.

The regulator in the panel then dropped a bombshell with the breaking news that the Financial Data Access (FiDA) regulation, which established rules on access, sharing and use of customer data in financial services, might get dropped by the EU. And one of the panel felt that improving transparency and mobility on pensions would be an excellent innovation in open finance.

The last section involved trying to predict the future. Will PSD3 be a good upgrade of the current version? The current friction between banks, third party providers and API use should be a target for improvement. FiDA is controversial as it stands and could be a burden for data holders. And PSD3 excitement might be premature as work on the current version is still ongoing!  

The parting sentiment was for a united Europe in these uncertain times – along with a pragmatic observation that consumers don’t care about finance and regulation, they just want something that works easily. The moderator concluded that the panel had not determined whether Open Finance was an opportunity or was actually a Pandora’s box of risk. Until next time…