Open Finance

Genesis of a Revolution
 Contents

Foreword 3
Acknowledgements 3
Executive Summary 4
Introduction 6
1. Key drivers of open finance 8
Regulatory frameworks 8
Demographic changes 12
Technological developments 13
2. Open finance will redefine the financial services industry 14
Open finance and the future of the payments industry 14
Open finance and the future of the banking industry 20
Open finance and the future of the asset and wealth management (AWM) industry 26
Open finance and the future of the insurance industry 35
3. Challenges in open finance 40
4. Embracing open finance: Strategies for success 42
Contacts 44

2 | Open Finance: Genesis of a Revolution

Foreword
The financial services industry stands at the precipice of a transformative era: the journey from open banking to
open finance – a paradigm shift that is set to redefine the very core of the industry. As it did with PSD2 and open
banking, a concept of which the EU can credibly claim to have been at the origin, European Union legislation will
once again be a driving force behind open finance. This report delves deeply into the forces shaping this evolution
and the consequential opportunities, and challenges, that lie ahead for Europe’s financial services sector. I would
like to take this opportunity to thank the team at PwC Luxembourg for their excellent work in helping to bring this
report to light.

Five years ago, the concept of open finance might have seemed a distant vision. Yet, today, its unfolding in
real time is evident. Europe’s financial sector is uniquely positioned to lead this transformation, spurred by a
confluence of regulatory foresight, technological advancements, and demographic shifts. Regulatory frameworks
such as the Financial and Data Access framework, Payment Services Directive II, and the Payment Services
Regulation are not merely compliance measures, but catalysts for innovation and adaptation. As always,
however, a core challenge will be to ensure that the EU creates the necessary regulatory guardrails without stifling
innovation or undermining European competitiveness. This is certainly not a given. As the recent Letta and Draghi
reports have underlined, complex and excessive regulatory frameworks, which can lead to overlapping rules and
over-reporting, have acted as a significant barrier to EU competitiveness.

If Europe gets it right, however, open finance has the potential to become an essential competitive advantage
for its financial services sector. It can encourage institutions to transcend traditional banking and insurance
models, to move towards a seamless and integrated system where customer-centricity and data-driven services
become benchmarks of excellence. This report envisions a future where financial services are no longer siloed but
interconnected, enabling unprecedented access to financial products and tailored advice across banking, asset
management, and insurance sectors.

As the competitive landscape shifts in response, the institutions that thrive will be the ones viewing open finance
as an opportunity to redefine their relationships with customers, harness the power of data, and deliver services
that are not just inclusive but aligned with the needs of a digitally native generation. The insights provided
herein are not just a roadmap but a call for all stakeholders to collaboratively foster an ecosystem that is robust,
innovative, and above all, consumer-oriented.

The path ahead is challenging but equally promising, and it is through informed insights, strategic foresight, and
collective action that the European financial services industry will not only adapt but lead the way in a new era of
financial services.

Tom Théobald
CEO, Luxembourg for Finance

Acknowledgements
LFF and PwC wish to sincerely thank all the professionals who generously contributed their time and insights
to this report. Your expertise and perspectives were instrumental in enriching the depth of the findings and
enhancing the overall quality of this publication. Special thanks are extended to the following leaders:
Edward Glyn, Managing Director—Head of Global Markets, Calastone
Simon Torrance, CEO, Embedded Finance & Insurance Strategies, Founder, AI Risk
Onno Bloemers, Partner, First Day Advisory Group
Martin J. Gylfe, CEO and Co-Founder, Insurely

Open Finance: Genesis of a Revolution | 3

 Executive Summary
Half a decade ago, we peered into the future Open finance will herald a universally instant
and foresaw the European financial sector economy
gravitating towards “amazonisation”, where For the payment industry, we envision a future where open
seamless, integrated services would become finance creates a universally instant economy. Here, real-time
the norm. Today, that vision is taking shape. transactions will become the norm and advanced APIs will
The financial sector is yet again undergoing make this possible.
a fundamental transformation, and this time, Open finance will create new revenue streams
it is the transition from open banking to open through data monetisation
finance. With this transition, the fragmented age
of financial services is entering its twilight—one In the banking industry, data monetisation will become a
significant revenue stream for financial institutions that hold
that should be fully realised by the end of this customer data and, with client consent, provide it to third
decade. In its place, a new era is emerging. parties. Banks, as the primary financial institutions for many
In this era, data will flow freely, with customer clients across Europe, are particularly well-positioned to benefit
consent, powering a more interconnected and from this trend due to their extensive access to customer data.
client-centric ecosystem. This transformation Open finance will create holistic advice and
will redefine how banking, asset and wealth management solutions
management, insurance, and payments are
delivered, as institutions adapt to a seamless In the AWM industry, data sharing through open finance will
allow industry players to provide clients with an overall view of
and data-driven financial landscape. The their investments, even if these are with different advisors and
industry must adapt now—or risk being left include products from various asset managers. These one-stop
behind—as open finance redefines competitive shops will offer real-time, optimised asset allocation advice
advantage. and the best products suited to their allocations. This trend will
enhance transparency and comparability within the industry
However, for open finance to deliver any true value to the at an unprecedented scale, driving further consolidation and
economy, three critical forces will shape its adoption: regulatory leading to the accelerated extinction of those asset managers
frameworks, demographic changes, and technological that will be unable to adapt and provide a distinctive value
advancements. The Financial and Data Access framework proposition. We expect the extinction rate to double compared
(FiDA) will be the foremost driver of open finance in the EU, to previous trends.
supported by two additional regulatory pillars: Payment Service
Directive III (PSD3) and the Payment Services Regulation (PSR). Open finance will expand insurance distribution
Together, these regulations will make open finance mandatory, markets
advance data monetisation, lower barriers of entry, and
diminish the role of traditional intermediaries such as banks and In the insurance industry, open finance will enable insurers to
brokers. At the same time, demographic shifts are ushering in a expand their footprint beyond traditional markets by partnering
younger, tech-savvy generation that demands more seamless, with FinTechs, insurtechs and other innovative players. These
digital solutions—further spurring the rise of open finance. partnerships will allow insurers to easily integrate their products
Technological enablers such as APIs, cloud computing and with the non-insurance offerings of their business partners,
AI are also major drivers of open finance, with APIs playing a providing a broader and seamless customer experience for their
crucial role in its evolution. The convergence of these drivers will clients.
further lead a transition even beyond open finance to open data.

Open finance will redefine the future of various industries within

the financial sector. While payments and banking, already
accustomed to open banking, are expected to experience a
smoother transition, asset and wealth management (AWM),
along with insurance, will also be integral to the new era open
finance. No industry will be left untouched as this transformation
unfolds.

4 | Open Finance: Genesis of a Revolution

Our recommendations
Open finance will herald a revolution so profound that industry
players will be compelled to reshape their business models.
We are truly at the genesis of a revolution, and open finance
will unlock significant opportunities for innovation, enhanced
customer experiences and competitive advantages. For this
reason, we outline some key considerations that will position the
European financial sector to navigate the evolving landscape:

Strike the right strategic balance Adopt a robust data governance framework
As open finance becomes increasingly entrenched, To guard against the risk of data misuse in an era where
financial institutions need to be deliberate about their data flows more freely, with client permission of course,
strategy of adoption. Whether they pursue the role of financial institutions and TPPs must prioritise both data
participants or creators of B2C or B2B platforms—or security and ethical data use. We emphasise the burden
integrate with TPPs to offer their services—the ideal of care that data receivers must uphold in data usage and
strategy is to match the strategy to the institution’s specific handling. We also urge financial institutions to go beyond
needs and market context. mere regulatory compliance to build comprehensive data
protection strategies.

Anticipate intra-industry competition Leverage cross-border API integration

As customer data becomes more accessible, financial Although open finance remains a growing trend, many
institutions can more easily offer specialised services within solutions remain confined to national markets. However,
and beyond their respective industries. Given this reality, it if open banking is any indicator of how widespread open
is crucial for financial institutions to anticipate the rise of all- finance will soon be, then it is important for financial
in-one service providers and develop strategies to address institutions to tap into the global potential of open finance
this shift. now. It is therefore essential to begin the open finance
transition now, to fully leverage cross-border opportunities
in the future.

Anchor your customer base and pursue new prospects

With the advent of open finance, there is the potential of incumbent financial institutions being relegated to mere product
providers while large data aggregators usurp established customer relationships. To get ahead of this, financial institutions
should leverage the opportunities created by new regulations and strengthen their connections with customers by thoughtfully
offering personalised, high-value solutions.

Open Finance: Genesis of a Revolution | 5

 Introduction
In the last few decades, the world of finance has navigated waves of disruption—be it online
banking, the rise of FinTechs, or the introduction of open banking which allowed third parties to
access once-guarded bank data. Now, we are entering the next paradigm of disruption. The age of
open finance is here, and it is set to rewrite the rules of the financial services sector.

As customer expectations evolve and data becomes the new Globally, decision-makers are already waking up to the new
currency, open finance is not just another step in the sector’s reality: open finance is no longer optional – it’s a must have.1
evolution—it is the genesis of a revolution. The boundaries We are talking about a future where banks are more than just
that have long separated the financial sector will crumble, and places to hold deposits or get loans, where insurers go beyond
in their place will rise a new ecosystem where the old silos of selling insurance policies, and where asset managers do not
banking, insurance, asset and wealth management (AWM), and solely manage portfolios. Rather, these industries will merge into
payments no longer exist as standalone entities. This revolution a unified network, offering bespoke financial solutions powered
will give rise to a seamless ecosystem where a new breed of by data and technology. This is the future: a world where
players delivers the full-spectrum of financial service offerings, institutions don’t just sell products but offer holistic solutions
all under one roof. that optimise their clients’ entire financial well-being.

This is a call to action for the entire financial sector. The future Nonetheless, the discussion around open finance would
will not be kind to legacy players who fail to adapt, as they risk not be possible without the introduction of the Payment
losing their most prized asset—client relationships. In this new Services Directive II (PSD2) in the European Union in 2018. Its
paradigm, firms that do not evolve will fade into irrelevance, implementation was an attempt to drive the financial sector
relegated to mere manufacturers of commoditised financial towards a more open and competitive landscape, aligning with
products. The days of locking clients into isolated offerings are the broader goals of regulators. By mandating that banks share
over. Financial institutions will be forced to play in a marketplace customer data with trusted third parties, it not only transformed
where clients demand integrated, personalised advice across the industry but also reflected the intention to pave the way for
all their financial needs. Those who fail to adapt in this new a more integrated, customer-centric financial ecosystem. Now,
space will find themselves edged out of the relationship, with open finance builds on these principles, extending data sharing
clients opting for newer, more dynamic entrants that embrace to a wider range of financial services and creating an integrated
openness and interoperability. This change is not theoretical. It is ecosystem. Other regulatory initiatives in the European
happening now, and it’s about to shake the very foundations of landscape, such as the Financial Data Access framework (FiDA),
the financial sector. the Payment Services Regulation (PSR), and the upcoming
Payment Services Directive III (PSD3), will play a crucial role in
shaping the future of open banking and open finance.

At the heart of the transformation lie open Application

Figure 1: Global API product usage in 2023 Programming Interfaces (APIs). This technology is what makes
UK it possible to securely share data across financial institutions,
US & Canada FinTechs and third-party providers (TPPs). The days when
5% financial institutions held client data as if they were closely-
6%
Latin America guarded secrets are over. In today’s era of open finance, data
5% Asia-Pacific
29%
is no longer kept under lock and key—it is openly shared
Middle East & across platforms, with client consent, fostering collaboration
9%
Africa and innovation. APIs’ popularity within Europe has soared,
especially with the rise of open banking (Figure 1). As open
banking evolves into open finance, APIs will play a crucial role
in extending data-sharing beyond banking. The number of API
calls2 is projected to grow from 102 bn in 2023 to 580 bn in
46% 2027, growing at a compound annual growth rate (CAGR) of
54.4%.3
Europe
Sources: PwC Global AWM & ESG Research Centre; Kontomatik

1. According to a Finastra survey from late 2023, nearly one in two (48%) global 2. API “call” is how systems communicate with one another to exchange information
financial institutions consider open finance as a “must have” for their businesses. securely and efficiently, often in real-time. A higher volume of API “calls” indicates a
Additionally, 85% of respondents acknowledged that it is fostering greater strong level of integration and interaction between financial institutions, TPPs, and
collaboration in banking. various platforms.
3. Statista. Number of open banking Application Programming Interface (API) calls in
2023, with a forecast for 2027. June 2023.

6 | Open Finance: Genesis of a Revolution

The entire economy is moving towards an era of open data,
where financial and non-financial information blend to create
customised and innovative business models. This broader
exchange allows businesses to combine financial data with non-
financial data. This future isn’t just open – it’s interconnected.

Figure 2: The evolution of open banking, open finance and open data

Open banking
Focuses on payment data, payment initiation, account
aggregation.
E.g. account information, transaction history, instant credit
risk etc.

From open Open finance

banking Utilises non-banking data.
to open E.g. Insurance, AWM, pensions, taxes, etc.
finance

Open data
Includes significant non-financial data.
E.g. Retail, transit, social media, health, etc.

Source: PwC Global AWM & ESG Research Centre

However, the potential of open finance is contingent on an This is more than just a technological shift; it is a fundamental
environment that enables it. Data privacy and security concerns shift in how financial firms interact with their clients. While some
remain paramount as sensitive financial information is shared may see it as a threat, it is, in fact, a tremendous opportunity
across multiple platforms. Additionally, regulatory frameworks for firms seeking success and long-term growth amidst an
must keep pace with rapid technological advancements increasingly tense macroeconomic environment. These firms will
and evolving consumer expectations. Collaborative efforts be those that build deep, lasting relationships with their clients
among stakeholders—including banks, FinTechs, regulators, by offering them open finance-led solutions that serve their best
and consumers—are essential to address these challenges interest. Adapt or be left behind—the choice really is stark.
and foster a safe and inclusive open finance ecosystem. If
the success of the open banking market—which is now on a
trajectory to hit USD 123.7 bn by 2031, up from USD 13.9 bn in
2020—is any indication, open finance represents a revolution
within the financial sector.4

4. Allied Market Research. Open Banking Market Expected to Reach $123.7 Billion by
2031. August 2022.

Open Finance: Genesis of a Revolution | 7

 1
Key drivers of
open finance
Open finance is being propelled by three main drivers:
Regulatory frameworks, demographic changes, and
technological advancements.

Regulatory frameworks
Regulations will play a key role in pushing financial services players to share data
and adopt open finance. They will determine the implementation of open finance
by providing a structured mechanism to facilitate data sharing between financial
institutions and TPPs. This will ensure consumer protection, enhance competition,
promote innovation, and mitigate data privacy and security risks, thus fostering trust
among consumers and businesses.

Jurisdictions such as the EU, the UK, Australia, the US, Brazil, India, the UAE,
and Nigeria are paving the way towards an open financial system with a variety of
regulatory frameworks.

8 | Open Finance: Genesis of a Revolution

Figure 3: Global regulatory overview from 2016 to 2024

02/2020 05/2022 2024

The EU Commission The Monetary Authority of The CDR is expected to
presents the EU data Singapore develops the Financial be extended to the non-
strategy Industry API register banking lending sector

The UK is working on the

01/2016 03/2018 05/2020 06/2022 Data Protection and Digital
The EU approves PSD2 The Mexican The Central Bank of The Data Governance Act Information (No.2) Bill
Government releases Brazil (BCB) unrolls the enters into force (DPDI)
the FinTech Law implementation of Open
Banking The EU is expected to
approve the PSD3, PSR,
FiDA, and EIDAS 2.0
04/2016 06/2018 07/2020 10/2022
The National Payment The Hong Kong The Australian Government The CDR is extended to the
Corporation of Monetary Authority rolls out the Consumer energy sector
India (NPCI) pilot- (HKMA) publishes the Data Right (CDR)
launches the Unified Open API Framework
Payments Interface
(UPI) 09/2018 2020 11/2022
The HKMA initiates The FCA extends Open Saudi Arabia’s central bank
the Faster Payment Banking services to (SAMA) announces the issuance
System (FPS) FinTech firms, mutual of the Open Banking framework
finance businesses, ASEAN countries sign a MUC in
Korea Post, and Regional Payment Connectivity
securities companies. (RPC)

2016 2017 2018 2019 2020 2021 2022 2023 2024

07/2017 10/2019 02/2021 03/2023

The UK Treasury The Financial Services The Central Bank of Nigeria The Central Bank of Nigeria approves
transposes the Commission (FSC) releases the regulatory the operational guideline to Open
EU PSD2 into of South Korea pilot- framework for Open Banking
PSRs 2017 launches Open Banking Banking
Services
04/2021 04/2023
The Department of Finance SAMA introduces the Open Banking
Canada releases the final Lab
report from the Advisory
Committee on Open 08/2023
Banking
Indian Parliament approves the Digital
09/2021 Personal Data Protection (DPDP) Act
The Reserve Bank of India
(RBI) launches the Account 10/2023
Aggregator framework The Consumer Financial Protection
Bureau (CFPB) presents the Personal
Financial Data Rights (PFDR)
The BCB launches the Open
Investment phase

11/2023
The SEPA Payment Account Access
(SPAA) scheme enters into force
Sources: PwC Global AWM and ESG Research Centre, NPCI, HM Treasury, HKMA, EU Commission, FSC of South The EU Council approves the Data Act
Korea, BCB, Central Bank of Nigeria, Department of Finance Canada, Monetary Authority of Singapore, Gobierno de
Mexico, Australian Government, RBI, EU Council, EU Commission, CFPB, FSCA, Central Bank of Nigeria, SAMA, BCB,
UK Government, BOT, Indian Parliament.

Open Finance: Genesis of a Revolution | 9

 EU regulations are breaking down the barriers to open finance
EU regulatory initiatives will require many institutions to adopt FiDA will be the main piece of regulation that will drive open
open finance sooner than they might have otherwise. For this finance in the EU, aiming to expand the principles established
reason, regulation remains the key driving force of open finance by PSD2 across a broader array of segments within the financial
in the EU, rather than market forces. Regulations have already sector, including non-life insurance, pensions, AWM, loans,
paved the way for open banking in the EU, and the Union is savings, and credit. PSD3 and PSR, which update and build
spearheading the transition to open finance. upon PSD2, will also play an instrumental part in the broader
regulatory evolution on the European landscape. Together,
they continue the drive towards open finance, simplifying and
expanding data sharing across the financial sector.

The EU’s open finance regulatory framework

FiDA PSD3 PSR
Establishes a standardised mechanism for data sharing Expands on PSD2. Turns PSD2 into a regulation.
within the financial sector.
Financial institutions are obliged to share customer data with Financial institutions must Regulates the relationship
authorised TPPs5 via financial data sharing schemes (FDSS). create a permission dashboard between banks and payment
where consumers can opt in or institutions.
All financial institutions in the EU must join at least one out of data sharing.
FDSS that represents a significant portion of the market Implements Strong Customer
for a product or service. The data sharing terms (including The legal distinction between Authentication (SCA)
compensation) of this scheme must be agreed upon by the payment institutions and requirements and other data
member institutions. e-money institutions is protection measures.
eliminated.
Financial institutions must obtain consumer consent to share
their data and may only use it for purposes agreed upon with
the consumer. Institutions must also delete data once it is no
longer needed.

If financial institutions fail to set up an FDSS that sufficiently

accomplishes FiDA’s goals, the European Commission may
step in to create one.

The EU framework will have four main impacts on the financial services industry.

1 2 3 4
Open finance will Data monetisation There will be fewer Traditional
become mandatory will become more entry barriers to the intermediaries
widespread industry will become less
Financial institutions in
the EU will be required prevalent
By requiring that parties The widespread
to share data with to an FDSS agree on availability of financial As data sharing becomes
one another on client data sharing terms, data means that many widespread, traditional
consent. This will financial services financial services intermediaries like banks
accelerate the adoption companies can companies will be able to and brokers will become
of open finance and demand that they be offer services traditionally less important for
spur greater competition compensated for sharing exclusive to certain product distribution.
and innovation within their customer data with sectors of the financial
the financial services other firms. This will services industry. For It will become easier
industry. Consumers will make data monetisation example, non-banks will for financial services
also have the right to easier and more be able to offer credit companies to reach each
know how their data is widespread. arrangements more other and their clients.
being used. easily by using bank
customer data.

10 | Open Finance: Genesis of a Revolution 5. European Commission. Framework for financial data access Retrieved, August
2024.
Regulation will be needed to establish open finance in all jurisdictions
In jurisdictions where open finance is being driven by markets, transition process. Rather, policymakers allow the private
rather than regulatory forces, TPPs and banks can create sector to create open finance or data exchange solutions, and
individual API platforms in any manner they choose. However, a then create regulatory frameworks around them to support
lack of standardisation will prove challenging when integrating their integration into the wider economy. For instance, in North
with other financial centres or platforms. America, API standards set by the Financial Data Exchange
(FDX), a nonprofit standards-setting organisation, have been
Nevertheless, a market-driven approach does not mean that widely adopted by open finance platforms in the United States
regulators or policymakers are absent from the open finance and Canada.

Regulatory frameworks on standardisation will soon emerge

As open finance evolves, regulatory frameworks will continue global financial ecosystem’s overall user experience. With
to adapt to ensure data security, privacy, and interoperability standardised APIs and data formats, new entrants can more
between different financial services. We expect global efforts to easily connect with existing financial networks and offer their
standardise data formats and APIs to gain momentum. Such services to a broader audience. This openness will foster
standardisation is crucial for achieving seamless interoperability, competition, leading to more innovative financial products and
making it easier for various financial institutions—such as services.
payment providers, banks, insurers, and wealth managers—to
integrate and collaborate with TPPs. This harmonisation will
reduce friction in cross-border transactions and enhance the

Figure 4: Standardised APIs will drive the implementation of open finance

Data Data Data Data Data Data

Holder A Holder B Holder C Holder A Holder B Holder C
Response Response

API A API B API C Standardised API

Request Request

TPP 1 TPP 2 TPP 3 TPP 1 TPP 2 TPP 3

Source: PwC Global AWM & ESG Research Centre

Open Finance: Genesis of a Revolution | 11

 Demographic changes
The demographic shift, as Gen Z and Millennials become an generations are tech-savvy and expect convenient digital
increasingly larger portion of financial services consumers, solutions, creating enormous demand for open finance-
is another significant driver of open finance. These younger powered products.

Figure 5: Percentage of global population by digital category

80%

67.9%
70%
62.4%
60%

50%

40% 35.0%

30%
16.9%
20%

10% 15.2%

0%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Traditional Consumers Digital Converts Digital Natives
Note: Digital natives refers to Generation Alpha, Gen Z, and Millennials. Digital converts refer to Generation X. Traditional consumers refers to Baby Boomers, the Silent Generation, and
the Greatest Generation.
Sources: PwC Global AWM & ESG Research Centre; United Nations

Digital natives, those born after 1980, are key to the future The increasing demand for open finance from younger
success of open finance as they are more open to data sharing generations is not just because they prefer tech-based
than previous generations. More than 50% of digital natives are solutions. It is also driven by the fact that Gen Z and Millennials
not only willing to share their personal data but will allow their are investing more than their parents and grandparents did at
data to be sold to TPPs if they are provided with more value in their age, giving them greater exposure to financial markets. For
exchange.6 It is anticipated that by 2029, Millennials will have instance, in the United States, 37% of Gen Z were estimated to
the largest portion of disposable income of any age group, own stocks as per a poll conducted in early 2024.8 Furthermore,
while Baby Boomers and Generation X’s share of global wealth 45% of Gen Z members had invested in the stock market by
declines progressively. age 21, significantly more than Millennials (31%), Gen X (14%),
and Baby Boomers (9%).9
The financial services sector is therefore trying to attract
these more digitally-minded consumers by increasing their Independently of the expected surge in demand that younger
technology-based product offering. Taking the UK as an generations will have for open finance solutions, digital natives
example, a study carried out by Moneyhub in late 2023 found also offer financial institutions the possibility of collecting larger
that digital natives are already a significant tranche of open amounts of data, making new products possible. Young people
banking payments users. Indeed, 29% of 16 to 24-year-olds do not often have the same amount of traditional financial data
and 26% of 25 to 34-year-olds make payments using open as older generations, but through their digital footprints, they will
banking solutions—compared to just 13% of people over the provide vast amounts of alternative data that could be used to
age of 55.7 Many Gen Z and Millennials also claim that they are create new financial solutions. For example, banks are able to
willing to switch to other financial institutions if they believe they leverage large amounts of consumer data that will be available
offer a better service. This will drive the race to create customer- under an open finance ecosystem – especially that of young
centric open finance solutions. consumers – to create accurate creditworthiness assessments
on customers who otherwise do not have traditional data such
as a credit or transaction history.

6. Euromonitor International, Voice of the Consumer: Digital Survey 2023, July 2023 8. The Motley Fool, What Are Gen Z and Millennial Investors Buying in 2024?
7. Moneyhub, One in five now make payments using Open Banking, November 2023 January, 2024
9. World Economic Forum, Speaking Gen Z: How banks can attract young customers,
November 2023

12 | Open Finance: Genesis of a Revolution

Technological developments
The emergence of new technologies is also propelling open AI will allow financial institutions to create
finance solutions. These have expanded the horizon of what
is possible in the financial services sector over the past
more data-powered solutions
decade, particularly data-sharing technologies and AI which The use of AI in open finance will enable financial services
are redefining how consumers and businesses interact with firms to provide customer-centric solutions and make informed
financial services. As technology creates new possibilities, decisions based on real-time data. AI will be a necessary tool
proactive and creative financial services players are designing to process the enormous volume of highly precise customer
new solutions and innovative products. data that the financial industry will have access to under open
finance. Without AI, the data will not be able to be effectively
The upswing in technology use that open finance will create, will
understood and converted into attractive financial products or
eliminate the need for traditional intermediaries such as banks or
solutions at scale. Furthermore, AI-driven systems will be used
brokerages for many financial industry players. Rather, these will
for enhanced AML and KYC operations by monitoring real-
be replaced by technological intermediaries like API, cloud, or
time transactions to detect suspicious activities and prevent
AI providers. Technology companies and FinTechs will therefore
fraud, thereby enhancing security in the industry and facilitating
gain more prominence and market power within the financial
compliance with AML regulations. AI will also improve efficiency
services sector.
by automating repetitive tasks, increasing data analysis
accuracy, and enabling real-time analytics and predictive
APIs will circumvent traditional intermediaries modelling. These capabilities will enhance financial institutions’
APIs allow large amounts of data to be exchanged between agility and responsiveness.
financial players directly rather than via traditional intermediaries.
Generative AI (GenAI) will further facilitate the development
The increased uptake of APIs will propel decentralised finance
of innovative financial products. Its ability to create content,
and broader open finance adoption, making the financial
analyse patterns, and predict outcomes will allow for
services sector more open, transparent, internally interoperable,
unprecedented innovation, efficiency, and personalisation in
and simpler for customers. Increased accessibility of financial
financial services. GenAI can deliver highly tailored financial
services facilitated by APIs will increase competition within the
advice by analysing large amounts of data and adjusting
industry, causing a scramble to innovate and enhance customer
recommendations based on immediate changes such as
experience. Financial institutions will also begin investing in in-
income fluctuations, expenses, and market conditions,
house API capabilities to reduce reliance on technology service
while considering individual risk tolerance, risk profiles, and
providers.
preferences.
Cloud solutions will enable efficient data These drivers will impact how open finance will be adopted by
aggregation the industry in the coming decades and how the players within
each sub-industry will leverage the opportunities to enhance
Cloud platforms complement APIs by providing scalable, their business models.
flexible, and cost-effective infrastructure for implementing
open finance solutions. This technology will allow financial
institutions to store vast amounts of data securely and enhance
their advanced analytics and machine learning models. The
scalability of these platforms will also allow financial institutions
to handle fluctuating loads without investing heavily in physical
infrastructure. Institutions will be able to adjust their resources
up or down during high-traffic events to handle data exchange
peaks without disrupting services such as payment platforms
or insurance offerings. Furthermore, cloud service providers’
advanced data encryption methods bolster security, which will
help the financial services industry comply with data security
measures and maintain consumer trust.10

10. TechTarget, Cloud encryption, 2024.

Open Finance: Genesis of a Revolution | 13

 2
Open finance will redefine
the financial services industry
We have transitioned from asking when open finance will happen,
to how it will transform the different industries within the financial
services sector. We assess the extent of this transformation
across the payments, AWM, banking, and insurance industries.
As data flows more freely and financial services become
increasingly interconnected, the boundaries between these
industries will blur, creating a more seamless and integrated
ecosystem. With open finance, firms will be empowered to offer
more personalised and comprehensive solutions to their clients.
This shift will fundamentally transform how financial services
are delivered, with innovation, transparency, and customer
empowerment at their core. The future of these industries lies
in their ability to leverage open finance principles to evolve and
remain competitive in an evolving market.

Open finance and the future of the payments industry

Payments services stand at the forefront of financial services in terms of open data
adoption. Unlike other industries such as AWM or insurance, the payments industry
has long embraced open finance and API-driven solutions. Benefiting significantly from
open banking, the payments industry has experienced substantial growth, which has
increased competition for the traditional banking sector. Data-sharing initiatives have
expanded customer reach and fostered new operational models, allowing payment
companies to offer services traditionally within the remit of banks, such as account-to-
account (A2A) payments. The primary advantage of the payments industry lies in its
ability to provide faster, cheaper, and more efficient services than traditional banking
methods.

14 | Open Finance: Genesis of a Revolution

Open payment solutions are here
Open finance payments solutions are already available in a mature form. As illustrated
in the following graph, the number of new payment FinTechs began to surge in the
2010s with the spread of data exchange technologies and open-banking-friendly
regulations, peaking in 2016. Since then, the annual founding of payments FinTechs
has declined, indicating that the market demand for new payments solutions has
stabilised, with most open finance payment models already established.

Figure 6: Number of payment FinTechs founded by year, globally (selected segments)

54
3

43
4 20
37
2
32 11
3
28 14
26
2 6 24 8 23
2 3 21
19 3 3
17 17 22 6
5 2
13 14 5
13 12 1 14 12
11 2 4 19 18
10 9 1 9 15 18 10
1 8 3 5 12
6 6 7 2 2 7 3 9 5
1 11 2 13 10 4
1 10 1 9 9 6 11 9 2
3 6 7 5 1 2
3 6 6 5 7
1 3 3 4 3 3 4 4 4 4 1
1 2 1 1 1 1 2 1
1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Credit & BNPL Payment platforms & POS Platforms & APIs Wallets & super apps

Sources: PwC Global AWM & ESG Research Centre; Pitchbook

Open Finance: Genesis of a Revolution | 15

 Open finance to enhance existing open payment solutions
In other financial sectors, open finance is expected to drive data availability enables more user-specific services. Moreover,
innovation. However, in the payments industry, the process of the increased availability of financial data will simplify transaction
seamlessly transferring money is itself the product. Innovations authentication, facilitating secure payment issuance and receipt.
under open banking, and those anticipated under open finance, As open finance progresses, payment models will likely continue
will enhance the efficiency and user-friendliness of current to entrench themselves and expand their market presence.
models. Existing open data payment models will see wider Consequently, as more industry players adopt open finance,
adoption, increased efficiency, and personalisation as greater they will rely on proven open payment solutions.

Figure 7: Global payment methods: e-commerce and points of sale (POS)

Global E-commerce payment methods Global POS payment methods

Digital Wallets Digital Wallets

50% 30%
61% 46%

Credit Cards Credit Cards

22% 27%
15% 22%
Debit Cards Debit Cards
12% 23%
8% 18%
A2A Cash
7% 16%
8% 11%
BNPL Prepaid Cards
5% 2%
5%
2%
Cash on Delivery POS Financing
2% 1%
1%
1%
Prepaid Cards
1%
1%
2023 2027f
Note: Digital wallets include pass-through wallets that facilitate card transactions, stored value wallets and mobile money wallets and includes global brands such as Alipay, Apple Pay,
Google Pay, M-Pesa and PayPal as well as local and regional wallets.
Sources: PwC Global AWM & ESG Research Centre; Worldpay’s Global Payments Report 2024

Open finance to bolster the payments sector similar to open banking

The payments industry is poised for significant transformation critical role in shaping market dynamics. To thrive amidst
under open finance, which will entail substantial revenue this competitiveness, institutions must focus on meeting
increases, as Figure 8 below demonstrates. However, the and anticipating customer needs and making seamless and
industry is also facing intense competition from a broader integrated payment experiences essential. As the industry
range of financial industry players, including FinTech evolves, select payment solutions are also gaining traction by
startups, traditional banks, card networks, and super aligning closely with these changing customer expectations.
apps. This heightened competition will drive consolidation This alignment not only reinforces their importance but also
in payment usage, with customer preferences playing a highlights the promising growth projected for these solutions.

16 | Open Finance: Genesis of a Revolution

Figure 8: Projected increase in revenue for selected payment methods from 2020 to 2030, including percentage increase
(USD bn)

301% 50% 100%

313

212

141

78 84
42

Alternative payment methods PaaS Third party processors

2020 2030f
Sources: PwC Global AWM & ESG Research Centre; Research and Markets

Account-to-account payments (A2A) to gain popularity

Despite their existence prior to open banking, A2A payments Open finance data sharing will further expand A2A models,
gained mainstream traction with the advent of regulated third- enabling common APIs for payments between service
party financial service providers. Regulatory developments such providers and fostering an interconnected ecosystem of instant
as the SEPA Payment Account Access scheme (SPAA) invite payment apps. Strong customer authentication measures and
any EU bank or regulated FinTech to offer A2A payments and standardised APIs will facilitate seamless payments across
data services via APIs, benefiting merchants and consumers platforms.
alike.

Figure 9: Account-to-account payments emerge as a compelling alternative to the card payments landscape​​

A2A Payments Card Payments

Acquirer

SEPA Payment Account Access Scheme

2
Payer TPP SPAA APIs Payer’s Bank Payee 3
1 2 3 4 1
6
Payer Payee
4
Through the commercial transaction, the payer grants consent to 5
1
the TPP to initiate a payment and provides payment instructions.

2 The TPP initiates the payment and submits the request via an SPAA Issuer
API for SCA.

3 The payer’s bank processes the payment. 1 The payer uses a card to make a purchase.
2 The payee point-of-sale system securely captures the payer’s
4 The payee’s bank receives the funds. account information and forwards it to the acquirer (e.g. payer’s
bank).
3 The acquirer requests authorisation from the payer’s card network by
Source: PwC Global AWM & ESG Research Centre submitting the transaction details to the issuer (e.g. payee’s bank).
4 The card network presents the transaction to the issuer, seeking
authorisation.

5 The issuer grants authorisation for the transaction and relays the
response back to the payee.

6 The issuer transfers the payment to the acquirer, which deposits the
funds into the payee’s account.

Open Finance: Genesis of a Revolution | 17

 Mobile and digital wallets to extend their Payments as a service (PaaS) to become the
growth through open APIs standard
Digital wallets —inclusive of pass-through wallets, stored value PaaS options have become more common at points of sale
wallets, and mobile money wallets— continue to dominate the due to open banking, increasing market exposure and direct
global e-commerce landscape, accounting for 50% of total consumer contact. The widespread adoption of open finance
transaction value in 2023.11 As the fastest-growing payment will likely make this model even more prevalent. With younger
method in e-commerce, digital wallets are projected to grow at consumers driving demand for digital payment solutions,
a CAGR of 15% through 2027.12 The integration of open finance businesses must adopt PaaS to remain competitive. In 2023,
functionality into digital wallets allows users to top up their 53% of US consumers used digital wallet payment solutions
wallets with just a few clicks, without incurring additional costs. predominantly, with Gen Z and Millennials leading this trend.13
This combination of convenience and security is driving their
popularity among consumers and businesses alike.

A notable example of this application is seen with Apple. In

November 2023, Apple enhanced Apple Pay in the UK by
integrating an open API architecture. This update allows users
to access real-time account and transaction information directly
within the digital wallet, eliminating the need to switch to
banking apps. By merging digital wallets with open payments,
customers are provided with up-to-date information about
their account balances, enabling them to make more informed
financial decisions.

Figure 10: Digital wallets share of global transaction value 2017-2027f

61%

50%

45% 46%

30%

24%

18%

10%

2017 2020 2023 2027f

e-Commerce Point of sale

Sources: PwC Global AWM & ESG Research Centre; Worldpay’s Global Payments Report 2024

11. Payments Cards & Mobile, Digital wallets lead a new era in global payments, 13. Forbes, 53% Of Americans Use Digital Wallets More Than Traditional Payment
March 2024 Methods: Poll, August 2023
12. Statista, Mobile payments with digital wallets, April 2024

18 | Open Finance: Genesis of a Revolution

Buy now, pay later (BNPL) solutions will Variable recurring payments (VRPs) to become
become more personalised an alternative to direct debit
Open data solutions have fuelled the expansion of BNPL Variable Recurring Payments (VRPs) offer a flexible alternative
services, allowing consumers to split payments into interest-free to direct debit and credit cards by allowing consumers to set
instalments, making high-value purchases more accessible. up repeat payments of varying amounts securely and easily.
BNPL providers use APIs to access detailed transactional data, Unlike direct debits, VRPs let users set payment limits, modify
enabling better customer credit and risk assessments. This transactions easily, and provide a clear view of authorised
data can also be monetised within an open finance ecosystem, subscriptions. Banks on the other hand, cannot provide such
providing additional revenue streams. comprehensive list of subscriptions paid by card, and while they
can show subscriptions paid via direct debit, there is no limit on
By leveraging consumer data, BNPL providers can offer user- potential future payments. With its flexible, fast, and secure pay-
specific credit rates, allowing merchants to make informed by-bank model, we expect VRPs to become a viable alternative
decisions and reduce interest costs for low-risk clients. Despite to direct debits in the coming years.
higher interest rates in recent years, declining rates are expected
to boost BNPL demand among merchants and consumers. Integration with internet of things (IoT) and
wearables
Figure 11: Global merchandise volume by selected BNPL
As IoT and wearable devices become more common, payment
platforms (USD bn) solutions integrated with these technologies will emerge, offering
368.8 new ways for consumers to conduct transactions seamlessly
and securely. With open payments, using a wearable device
for transactions simplifies daily activities such as purchasing
refreshments or snacks at an event where carrying a purse or
wallet is impractical, buying a quick coffee or daily groceries,
255.2 and paying for access to transit systems. Wearables like
221.3 wristbands or rings will enhance convenience for these routine
consumer activities.

A universally instant economy

138.6
We envisage a future where real-time transactions become
the standard, enabled by significantly advanced APIs that
51.1 make instant universal payments possible. This shift will
transform the financial landscape, making instant transactions
the norm for businesses and consumers alike. The efficiency
and convenience of real-time payments will enhance user
2019 2020 2021 2022 2023
experiences, drive innovation, and set new expectations for
Sources:PwC Global AWM and ESG Research Centre and BIS speed and reliability in financial transactions worldwide. Current
market trends highlight the need for this change, with 32% of
respondents across the Netherlands, Finland, Germany, the
UK, Spain, and France expecting to receive payouts within
five minutes or less. Additionally, 21% of those who regularly
use pay-by-bank or A2A solutions consider 60 seconds a
reasonable time to receive a payout.14

14. Brite Payments, Instant Economy Payment Insights: Uncovering trends in online
payments 2024, January 2024

Open Finance: Genesis of a Revolution | 19

 Open finance and the future of the banking industry
The banking industry, with experience stemming from PSD2 and other global open
banking regulations, is well-positioned to lead the way in open finance adoption.
Many banks have already implemented APIs, familiarised themselves with the
concept of open data, and addressed challenges related to data standardisation and
cybersecurity among others. As open finance builds on the foundation laid by open
banking—which primarily facilitated third-party access to banking data and customer-
initiated payments—the banking industry finds itself at a pivotal moment.

Banks leading the way

For years, banks have developed robust systems to securely manage vast amounts of
sensitive data, from transaction histories to personal identification information. This has
equipped them with a strong foundation to manage the complexities of data sharing
and integration in the open finance era. Furthermore, the longstanding relationships
banks have built with their customers provide a strong basis for trust, making
consumers more comfortable sharing their financial information with established banks
rather than newer FinTech entities. This trust is reflected in the increasing number
of banks adopting open banking practices, as shown by the relatively large number
of API aggregators across EU member states, which facilitate secure data sharing
between banks and TPPs (Figure 12). This trend underscores the growing importance
of open banking as a key driver of innovation and customer-centric services in the
banking industry.

Figure 12: Number of API aggregators in EU member states and selected countries
API aggregators in EU member states API aggregators in selected countries
Spain 25 27 UK
Poland 25 20 EU Average
Germany 25
19 Switzerland
Portugal 23
17 USA
Italy 22
Denmark 22 17 Australia
Sweden 21 16 Singapore
Netherlands 21
15 Canada
Luxembourg 21
21 12 Brazil
Ireland
France 21 5 UAE
Finland 21 4 Mainland China
Austria 21
4 Hong Kong
Slovenia 20
4 India
Slovakia 20
Belgium 20 2 Nigeria
Romania 19 0 Saudi Arabia
Hungary 19
Greece 19
Estonia 19
Czechia 19
Croatia 19
Bulgaria 19
Lithuania 18
Latvia 18
Cyprus 18
Malta 16

Sources: PwC Global AWM and ESG Research Centre; Open Banking Tracker

20 | Open Finance: Genesis of a Revolution

A strategic opportunity for banks Open finance will transform user experience
Banks that proactively engage with open finance are well- In response to increasing competition, regulatory shifts,
positioned to leverage their extensive market reach and access and evolving customer preferences, banks are strategically
to consumer data to create comprehensive financial service pivoting towards customer-centric engagement banking. The
platforms. These platforms, supported by data exchange expectations of digital-native demographics, particularly the
standards like those in FiDA, could evolve into one-stop-shops demand for instant, personalised, and innovative services,
for financial products. Given their significant presence in both are driving this transformation. Therefore, with open finance,
the broader economy and among financial consumers, banks banks can offer more tailored solutions and recommendations,
are more adept at navigating the open finance landscape, which strengthening customer relationships and boosting loyalty15
will become mainstream in banking far earlier than in sectors like Private banks, traditionally key partners to High-Net-Worth
insurance or AWM. Individuals (HNWIs), are increasingly adopting FinTech solutions
to meet the growing demand for faster, more efficient services.
Open banking has already facilitated symbiotic relationships By leveraging open finance and bank data, FinTechs will
between banks and payment institutions, where banks deliver personalised financial solutions and real-time insights,
contribute infrastructure and regulatory expertise, while payment enhancing client experiences and enabling more strategic
institutions bring innovative solutions and customer-centric wealth management.
technologies. This growing interdependence is paving the way
for a more interconnected financial ecosystem, setting the stage Small and medium-sized enterprises (SMEs) are also poised
for future advancements in financial services. to benefit significantly from the transparency and accessibility
of data across the financial industry, potentially redefining
A future open finance model could see banks taking a leading their banking experience. Open finance streamlines access
role in the “platformisation” of financial services, potentially to financial services, empowering SMEs to make informed
creating one-stop platforms where various financial services— decisions through comprehensive financial insights presented
from loans and insurance products to investment funds and in a “dashboard” format. By integrating various financial data
mortgages—are available on a white-label basis. sources, SMEs will better understand their cash flow, financial
health, and creditworthiness, which will enhance financial
planning and access to credit. Historically underserved by larger
banks, SMEs stand to gain the most from open financial data,
fostering innovation, growth, and financial inclusion.

Figure 13: Global Assets of HNWIs/UHNWIs (USD tn)

Forecasts 6.0%
CAGR 4.6%
3.1% 147.4
139.6
9.7%
132.6
119.9 116.8
106.4
103.5

83.7
73.5

2018 2019 2020 2021 2022 2023e 2027 Low 2027 Base 2027 Best

Sources: PwC Global AWM and ESG Research Centre; Credit Suisse, OECD, IMF

15. According to the FINASTRA Financial Services State of the Nation Survey 2023, 39%
of financial decision-makers prioritise “improved customer services and personalised
experiences.”

Open Finance: Genesis of a Revolution | 21

 Neo-banks: pioneers of agile and innovative Through open banking, neo-banks have introduced tailored
banking solutions to a previously stagnant financial market, which
mainly served traditional banks. By utilising APIs to integrate
Since the advent of open banking, neo-banks have experienced and analyse data from multiple financial sources, neo-banks
rapid growth in its adoption and usage. This trend suggests that offer customised financial products and services, such as
while traditional banking may face challenges, embracing open personalised savings plans, real-time spending insights, and
finance could enhance their prospects in a data-driven financial instant loan approvals.
system.
This model allows for a more agile and innovative approach
Open banking has strengthened the relationship between to banking, enabling neo-banks to quickly adapt to customer
the banking and payments industries, particularly benefiting needs and market changes. The transparency and data-driven
neo-banks, while direct customer interactions in traditional decision-making inherent in open finance will further enhance
banks have begun to decline.16 These neo-banks are adopting risk assessment and competitive pricing, attracting a diverse
more sophisticated, data-driven business models with direct customer base and promoting financial inclusion. As neo-banks
consumer engagement, while traditional banks focus on continue to evolve, their reliance on open finance principles
integrating multiple APIs rather than developing customer-facing will drive further advancements in digital banking, setting new
applications for open banking or open finance. industry standards.

Traditional banks will increasingly lean towards

Figure 14: Number of Neo-Bank Users in Europe (mn)
strategic partnerships to stay competitive
124.3
In response to these industry changes, traditional banks are
increasingly exploring or forming strategic partnerships with
FinTech firms to stay competitive. Embracing innovative
services beyond traditional payments and adopting Banking-as-
a-Service (BaaS) models, which leverage API infrastructure, is
crucial for sustaining innovation. This approach fosters creative
59.5 service development and seamless connections among various
52.3
stakeholders.
33.6
Open finance presents both challenges and opportunities
20.2 for traditional banks. While non-bank financial institutions
11.7
6.7 may encroach on products historically unique to banks,
comprehensive open finance regulations like FiDA require all
2017 2018 2019 2020 2021 2022 2027f financial institutions to participate in data-sharing schemes and
Sources: PwC Global AWM & ESG Research Centre; Statista APIs. This levels the playing field between banks and non-bank
financial entities, forcing all players to adhere to the same rules.
Traditional banks that therefore embrace data exchange will be
better equipped to navigate the transition to open finance and
leverage its potential benefits.

Figure 15: Partnership of large European Banks with FinTech companies in 2023

European Banks FinTech companies 2023

May
Barclays Trade Ledger Saas
June
Santander Kombo Trade Finance
August
HSBC Tradeshift Embedded Finance
September
Deutsche Bank Taurus Digital Assets
September
LLOYDS BANK Fiserv. Payments
October
BNP PARIBAS 321 Founded Payments

Sources: PwC Global AWM & ESG Research Centre; Barclays, Santander, HSBC, Deutsche Bank, Lloyds Bank, BNP Paribas

16. Data from open banking platform facilitator Ndgit shows that 83% of its European
22 | Open Finance: Genesis of a Revolution PSD2 users are banks, yet 96% of API calls originate from TPPs.
Open finance will drive financial inclusion AI and machine learning will increasingly
In the future, we anticipate greater financial inclusion and a
become indispensable
more holistic overview of customers’ financial status. FinTech Advanced AI and machine learning algorithms will increasingly
innovations will play a significant role in providing affordable become essential in open finance development. These
and accessible financial products to individuals and small technologies will enhance fraud detection, risk management,
businesses previously excluded from the traditional financial and personalised financial advice, making financial services
system. Concurrently, the shift from open banking to open more secure and customer-centric. For example, AI systems
finance will integrate additional services such as pensions, could identify patterns indicative of identity theft or account
investments, and insurance, offering a comprehensive view of a takeovers by analysing transaction behaviour against historical
consumer’s financial health. data. Additionally, predictive analytics will enable banks to
assess credit risk with greater precision, using machine learning
models to forecast potential defaults based on a broader range
of variables. Enhanced security and risk management will be
vital as open banking expands and transactions become more
complex.

Figure 16: Estimated value of GenAI spending for the banking sector globally (USD bn)

Forecasts
85.0

54.6

35.1

22.6
14.5
9.3
3.9 6.0

2023 2024f 2025f 2026f 2027f 2028f 2029f 2030f

Sources: PwC Global AWM & ESG Research Centre; Juniper Research

Open Finance: Genesis of a Revolution | 23

 Banks will be essential in the drive towards API We envisage the following data monetisation models:
standardisation
Pay-per-request
Banks are well-equipped to play a pivotal role in data and API
This model involves charging fees for each data request
standardisation considering their significant experience with
made by a third party via an API. Financial institutions would
open banking. Their early adoption of open APIs and secure
generate revenue each time a third-party accesses customer
data-sharing practices provides them with a foundational
data through their APIs. This approach offers scalability and
understanding of the regulatory, technical, and security
flexibility, with fees potentially varying based on the type of data
challenges involved. This experience positions banks as key
requested, frequency of access, or volume of requests.
contributors to shaping standardised data-sharing frameworks
and ensuring interoperability across the broader financial
Data subscription
ecosystem.
In this model, financial institutions would provide third parties
Beyond their technical expertise, their longstanding relationship
with access to customer data through a subscription service.
with regulators also gives them a strategic advantage in
Subscribers would pay a recurring fee for continuous access
influencing the development of future standards. Their
to the data they require. This model offers a more predictable
collaboration with regulators and FinTechs will be vital in
and stable income stream compared to the pay-per-request
establishing a unified data-sharing framework within the broader
approach. Subscription tiers could be introduced, offering
financial sector. By leading the charge in these efforts, banks
different levels of access or additional services based on the
foster trust among consumers, regulators, and other institutions.
pricing plan.
Trust is critical as open finance expands, since consumers
need to feel confident that their data is being handled securely
Commissions on product and service sales
and responsibly across various platforms. As a result, banks’
leadership in standardisation not only reinforces their own Financial institutions could also monetise their data by offering
position but also builds the trust necessary for open finance to it to third parties, such as FinTechs, free of charge, and earning
thrive. a commission when these third parties sell products or services
based on that data.
Monetising access to data
We expect data monetisation to become a significant source
We anticipate that data monetisation will emerge as a key
of revenue in an industry increasingly dominated by open
revenue stream for financial services institutions that possess
finance. However, the growing demand for transparency and
customer data and serve as providers of this data, with
data protection could place additional strain on resources, as
client consent, to data users. Given that banks are often the
traditional financial institutions would need to invest in data
primary financial institutions for clients across Europe, they are
compliance and security measures. Failure to effectively address
exceptionally well-positioned to capitalise on this trend due to
these challenges could result in a loss of market share and
their extensive access to customer data.
diminished profitability for these institutions.
Certain open finance regulations, such as the EU’s proposed
FiDA framework, are expected to formalise data monetisation by
mandating that financial services companies be compensated
for sharing data with TPPs, thereby establishing a robust data
marketplace within the industry.

Looking ahead, we foresee the development of several data

monetisation models, each varying in whether they generate
continuous revenue streams or are based on individual data
transactions. These models will also differ in how data is utilised
by either the data provider or the consumer. Importantly, all
forms of data monetisation will necessitate strict compliance
with privacy regulations and the explicit consent of customers,
as customer ownership of data remains a cornerstone of open
finance.

24 | Open Finance: Genesis of a Revolution

Climate tech and open finance: A growing
synergy
As open finance evolves, its support for the clean tech sector
will likely increase by facilitating transaction data aggregation
and access through APIs. This capability allows consumers
and businesses committed to reducing their environmental
impact to share financial transactions with specialised
providers seamlessly. For example, companies like Doconomy
can analyse and quantify the CO2 emissions linked to each
transaction. By providing detailed insights into the carbon
footprint associated with individual spending patterns, open
finance will enable users to make more informed decisions
about their environmental impact.

The ability to measure and track carbon footprints through

transaction data will drive innovative climate tech solutions.
Businesses can use this data to create personalised carbon
offset programmes or develop strategies for more sustainable
purchasing practices. Integrating carbon footprint data into
financial services will enhance transparency and accountability,
further empowering individuals and organisations to take
meaningful steps towards reducing their environmental impact.

Open finance represents a significant opportunity for the

banking industry, offering the potential to enhance customer
experience, drive innovation, and improve operational
efficiencies.

Open Finance: Genesis of a Revolution | 25

 Open finance and the future of the Asset and Wealth
Management (AWM) industry
The asset management industry has experienced robust growth over the past decades
until 2022, driven by an almost zero interest rate environment, which led investors
to allocate significant portions of their wealth to asset managers. However, the swift
and strong rise in interest rates in 2022/2023 have changed the context in which
asset managers need to survive and thrive. Although we will see moderate decline
in interest rates in the near future, the zero-rate environment will not resurface in the
coming years. Players within the industry will need to innovate to increase efficiency
and revenues. The AWM industry is poised for revolution through emerging trends and
business models with open finance playing a key role.

Figure 17: Regional breakdown of the total AuM (USD tn)

Forecasts
5.2%
CAGR 3.4%
1.8%
7.0% 157.4 1.3
147.3 4.0
1.2
137.9 1.2 3.7
3.4 30.3
127.5 1.0 128.6 1.1 28.1
2.7 3.5 3.3%
115.8 0.9 115.1 0.9 25.7
106.6 2.6 22.0 2.8 21.1
0.8 3.8%
2.8 19.9 20.2 42.1
91.6 0.6 17.4 39.5
2.6 37.0 7.2%
34.9 34.3
15.4
32.2 30.7 3.5%
29.7
26.4 2.5%

67.0 74.7 79.6

68.6 70.6
56.0 60.3 60.6
46.5

2018 2019 2020 2021 2022 2023 2027 Low 2027 Base 2027 Best
North America Europe Asia-Pacific Latin America Middle East and Africa
Source: PwC Global AWM & ESG Research Centre

Holistic advice and management will dominate the industry

The future of both retail and institutional wealth and asset management will be holistic
and digital. Open finance will enable the creation and dominance of one-stop shops
within the industry. Data sharing through open finance will allow industry players to
provide clients with an overall view of their investments, even if these are with different
advisors and include products from various asset managers. This will enable these
one-stop shops to offer real-time, optimised asset allocation advice and the best
products suited to their allocations. With real-time data sharing, the tedious process of
collecting and comparing data through RFPs, currently used extensively by institutional
investors to choose appropriate asset managers, will become obsolete. This trend
will enhance transparency and comparability within the industry at an unprecedented
scale, driving further consolidation and leading to the accelerated extinction of asset
managers unable to adapt and provide a distinctive value proposition. We expect the
extinction rate to double compared to previous trends. However, open finance will also
pave the way for new entrants with business models suited to the new realities.

26 | Open Finance: Genesis of a Revolution

Figure 18: Asset concentration among the top 10 asset and wealth managers

60.0% 58.1% 57.5% 55.7% 55.1%

62.7% 61.4% 61.2% 56.2%

41.9% 42.5% 43.8% 44.3% 44.9%

38.6% 38.8% 40.0%
37.3%

2015 2016 2017 2018 2019 2020 2021 2022 2023

Top 10 AWMs Rest of AWMs
Source: PwC Global AWM & ESG Research Centre

The rise of robo-advisors

The creation of APIs for data sharing is set to improve automated and sophisticated investment advice and execution
accessibility and affordability for investors, democratising AWM for these segments. Leveraging APIs and AI will also impact
services and promoting financial inclusion. While personal higher wealth segments of HNWIs and UHNWIs, allowing
human financial advice will remain costly and unavailable to them to choose digital or human advice and interaction at their
lower wealth segments, we expect open finance, coupled with convenience, anytime, anywhere. This trend will contribute to a
the rise and sophistication of AI and data analytics, to lead to more rapid rise in robo-advisor AuM, as seen in Figure 19.

Figure 19: AuM of robo-advisors (USD tn)

19.3%
CAGR
5.9

66.8%

2.5
1.9

1.1
0.7
0.4
0.2

2017 2018 2019 2020 2021 2022 2027f

Source: PwC Global AWM & ESG Research Centre

Open Finance: Genesis of a Revolution | 27

 Hyper-personalisation of products
There has been a rising demand from both institutional and understand client needs and develop targeted products. We
retail investors for more personalised products tailored to their expect hyper-personalised products to take centre stage in the
expectations. Failing to satisfy these needs will lead investors future. Direct indexation, which allows institutional investors
to seek direct investments within capital markets or through and HNWIs to set up their own personal indices, is garnering
platforms such as eToro, where they can follow peers providing increased interest, with asset managers acquiring specialised
investment ideas aligned with their requirements. However, companies to provide such products and services.
open finance will equip asset managers with better tools to

Figure 20: Big players gear up to meet demand through acquisition of direct indexing firms

Charles Goldman Morgan BlackRock J.P.Morgan Vanguard Franklin PGIM BNY

Schwab Sachs Stanley Templeton MELLON

OpenInvest Green
Folio Harvest OPTIMAL
Aperio Just Invest
Financial Asset
Motif Parametric O’Shaughnessy Management

Source: PwC Global AWM & ESG Research Centre

Separately Managed Accounts (SMAs) have traditionally been Asset managers could offer SMAs, including thematic SMAs,
the preserve of institutional investors and HNWIs. However, Directly to Consumers (D2C) via platforms such as brokerage
with the advent of open finance and new technologies, it is services. They may also seek to bypass intermediaries like
becoming increasingly feasible to offer SMAs more broadly, brokers, providing SMAs and other asset types directly to
even to retail investors. We are poised to see an increase in both advisor-FinTech firms. These firms, leveraging new technological
the prominence and scope of SMAs as open finance facilitates capabilities, will assemble investment building blocks sourced
the development of SMAs for retail clients. These “funds for directly from asset managers to offer to their clients.
one” will be highly bespoke, tailored for individual investors, and
will encompass a wide array of fractionalised assets. Therefore, SMAs represent an area where the AWM industry can
become more democratised, thanks to the principles of open
finance.

28 | Open Finance: Genesis of a Revolution

Figure 21: Forecasted direct indexing AuM (USD bn) to grow at 21.3% CAGR by 2027

21.3%
CAGR
1,470

29.1%

462
350
275
100 120 150 130

2015 2016 2017 2018 2019 2020 2021 2027f

Source: PwC Global AWM & ESG Research Centre

Seamless account switching and management With this level of integration, customers will enjoy real-time
access to account information, the ability to compare services
As open finance evolves, the integration of APIs will revolutionise with ease, and the flexibility to swiftly switch between accounts.
the way customers switch and manage accounts within the This enhanced convenience, which allows for the management
AWM industry. By leveraging advanced API technology, account of all financial assets in one place, will not only elevate the
aggregation will enable users to view and manage multiple customer experience but also empower clients to make more
financial accounts from different institutions through a single, informed and agile decisions. As the AWM industry increasingly
unified interface. This capability will extend to brokerage, embraces open finance, the seamless switching of accounts
savings, and investment accounts, significantly enhancing the through a single interface will emerge as a critical differentiator
user experience and streamlining account management. for firms, with customers gravitating towards platforms that offer
this level of convenience and efficiency.
For example, clients will have the ability to transfer their
retirement savings from one provider to another, reallocate
investments across different portfolios, or consolidate multiple
brokerage accounts, all without the traditional burden of
cumbersome paperwork or lengthy administrative processes.

Open Finance: Genesis of a Revolution | 29

 Proliferation of distribution
Open finance will lead to new channels of retail fund distribution sale. Conversely, by embedding services provided by AWM
for asset managers. Traditionally, asset management products companies, non-financial businesses can avoid the costs and
have been distributed through banks, IFAs, and brokers. regulatory burdens associated with offering highly regulated
However, we expect the emergence and intensification of investment products themselves. This new distribution model
distribution channels via non-financial service players. will lead to significant opportunities for both AWM firms and
non-financial players. We expect non-financial corporations,
Within this distribution model, AWM products and services of especially those with strong brand recognition, to integrate
an asset manager will be integrated into the interfaces of TPPs holistic AWM offerings, while AWM firms will provide more
via APIs, allowing for a more seamless customer experience. personalised products and services by accessing a wide range
This distribution channel will create new revenue streams for of customer data from these non-financial firms.
AWM firms by integrating their products into more points of

Figure 22: Current vs. future distribution models

Current Distribution Models Future Distribution Models

Distribution via FS Players Distribution via FS Players

1 2 3 1 2 3
Asset Managers FS Players Investors Asset Managers FS Players Investors

Products Distribution Investors Products Distribution Investors

• Development of • Banks, IFAs, • Investments • Development of • Banks, IFAs, • Investments
funds Brokers, … • Product push funds Brokers, … • Product push
• No contact with • No contact with
end investors end investors

Vertical integration Vertical integration

1 2 1 2
Asset Managers Investors Asset Managers Investors

+ +
Products & Distribution Investors Products & Distribution Investors
• Asset managers owning distribution • Investments • Asset managers owning distribution • Investments
channel/Platform • Product push channel/Platform • Product push

Source: PwC Global AWM & ESG Research Centre Distribution via Non-FS Players
1 2 3
Asset Managers Non-FS Players Investors

Products Distribution Investors

• Development of • Telecom, retails, ... • Investments
funds • Product push
• No contact with
end investors

30 | Open Finance: Genesis of a Revolution

Asset and Wealth Management as a Service Nowhere to run, nowhere to hide
(AWMaaS) The movement towards more open financial ecosystems
With the advent of open banking, the Banking as a Service will result in higher product transparency and comparability,
(BaaS) business model has thrived. This model uses APIs to providing customers with the tools to make more informed
allow start-ups or corporations to connect with existing banking choices. With access to comprehensive data on fees and
infrastructure to develop their own banking products and performance across different AWM providers, customers will
services. We believe that with the progression towards open more readily identify better value propositions. This will make the
finance, we will also see the rise of AWMaaS. Players such as value-for-money proposition even more critical in the industry
BlackRock and Amundi are already providing AWM expertise than it already is. In recent years, fee pressure in the industry has
and technology within parts of the value chain (e.g., risk come from regulators and, to some extent, investor demand.
management) to other asset managers. However, this model will However, open finance is set to increase competitiveness and
use APIs to offer complete asset management functionalities place further pressure on fees within the industry. We expect
and digital infrastructure to new players who do not wish to both active and passive TER to decline by 12% and 9%,
invest in those IT capabilities and front, middle, and back-office respectively, by 2027.
processes. This will result in new entrants to the AWM industry,
increasing competition. Whereas in the past, setting up an asset
or wealth management company was a long, costly, and difficult
process, AWMaaS will allow potential new players to easily and
quickly set up AWM operations.

Figure 23: Global TER of active investment funds (bps) Figure 24: Global TER of passive investment funds (bps)

Forecasts Forecasts
120 114 29 28
110 27
101 25
84
78
82 76 19 19
76 17
69 67 67 16 16 15
64 17 14
57 59 15 14
14 12 13
48
11 11
10
24 25
15 13

2017 2018 2019 2020 2021 2022 2027f 2017 2018 2019 2020 2021 2022 2027f

Equity Bond Money Market* Mixed** Combined

Note: Data includes mutual funds and ETFs domiciled in Europe, the US, (Middle East and Africa) MEA, and (Latin America) LATAM. TERs are based on their asset weight. *Data does
not include passive money market funds domiciled in the US and **passive mixed funds in LATAM.
Sources: PwC Global AWM Market Research Centre, Lipper

Open Finance: Genesis of a Revolution | 31

 Increased efficiency
Open finance will not only increase competitiveness and innovation within the industry
but also enhance the efficiency of current operating models. Data exchange between
parties such as the asset manager and the custodian or client, which is currently
cumbersome, time-consuming, and costly, will be streamlined through the automatic
sharing of data via APIs.

Client Onboarding Made Easy

The implementation of open finance would allow AWM firms to streamline client
onboarding by making Know Your Customer (KYC) and Anti-Money Laundering (AML)
functions more efficient. This can reduce manual paperwork, potential errors, and
delays linked to traditional data collection methods. Making customer due diligence
faster would enhance the customer experience, making it more comfortable and
streamlined. In the future, we expect clients to be able to be onboarded instantly,
assuming they already have a relationship with another player in the financial system.
Users’ financial accounts could be linked instantly, meaning that new onboarding
processes would only require the client to provide new information not yet disclosed
to any other financial institution. The data-sharing capabilities of open finance tools
would also help institutions comply with global AML regulations. Secure and real-time
data exchanges between international financial institutions would ensure transaction
monitoring and consistent compliance with relevant regulations. As their application
becomes broader and more integral to KYC/AML execution, future models of open
finance-driven KYC/AML functionalities could enable AWM institutions to develop and
build custom products and in-house solutions with features such as monitoring alerts
and searching or uploading evidence for an AML investigation. In this context, open
finance would not merely serve as a plug-and-play tool but represent a fundamental
technology on which firms could build their entire KYC/AML system.

Figure 25: Estimates for the total cost of financial crime compliance (2023)

North America EMEA

USD 61bn USD 85bn

APAC
LATAM USD 45bn
USD 15bn
Global

USD 206bn
Sources: PwC Global AWM & ESG Research Centre, LexisNexis Risk Solutions

32 | Open Finance: Genesis of a Revolution

Enhancing ESG and Private Market Challenges

Both ESG and private markets are among the fastest-growing segments within the
AWM industry. Private markets are set to reach USD 18tn by 2027, growing at a CAGR
of 6.3%.

Figure 26: Global private markets AuM by region (USD tn)

Forecasts
CAGR 7.8%
6.3%
4.8% 19.0
8.9%
18.0
17.0
3.1
3.0
2.8 8.5%
14.1
13.4
4.4
12.5 2.2 4.2
11.3 2.1 4.0 4.6%
10.3 2.0
9.2 1.8 3.5
1.6 3.3
3.0
1.4 2.8 6.6%
2.5
2.2 11.3
10.6
10.0
7.2 8.2
6.5 7.8
6.0
5.4

2018 2019 2020 2021 2022 2023 2027 Low 2027 Base 2027 High
North America Europe Asia-Pacific Latin America Middle East and Africa

Source: PwC Global AWM & ESG Research Centre

ESG, which has seen a tremendous growth since the beginning of this decade, is set
to grow further at a CAGR of 15.7% to reach USD 33.6tn by 2027.

Figure 27: Global ESG AuM by region (USD tn)

Forecasts
CAGR 26.1%

47.5
26.3%
4.8
15.7%

33.6
6.6% 3.3
17.2% 27.6
24.3
2.4 20.8%
18.3 18.8 19.7
1.0 1.1 32.4%
14.3
9.5%
7.4 13.2 13.7
27.9% 14.7
3.8 10.3
7.4
2.9 3.9 3.8
2019 2021 2023 2027 Low 2027 Base 2027 High
60.3
North America Europe Asia-Pacific Latin America Middle East and Africa
Source: PwC Global AWM & ESG Research Centre

Open Finance: Genesis of a Revolution | 33

 However, both areas grapple with the key challenge of data Putting it all together
collection and quality from portfolio companies. Open finance
will ease these challenges by providing real-time, automated Open finance will be a transformational innovation that can
data flow, which is less prone to flaws than when data be leveraged to tackle the collaboration challenges that exist
exchanges involve human interfaces. Open finance will allow within the AWM industry. Indeed, open finance could foster an
General Partners (GPs) to access a broader range of financial interconnected ecosystem where custodians, asset managers,
data, including information about private companies, investment FinTech companies, and other TPPs seamlessly share data
opportunities, and historical performance, aiding them in and services. It would achieve this through the implementation
conducting due diligence and making more accurate decisions of openly available APIs. This will allow asset managers and
about potential investments. APIs would also enable direct, financial advisors to integrate position and transaction data into
real-time data flow to GPs’ systems from portfolio companies, their portfolio management systems (Figure 27).
allowing them to make faster decisions and improve efficiency
and performance. A significant advantage of open finance is the FinTechs and other TPPs would securely connect to custodians’
enhanced availability of data. By utilising open APIs to access APIs with ease, integrating data directly into their own software.
third-party ESG datasets, financial institutions can better adhere This improved data flow would greatly enhance collaboration
to new regulations. among all parties.

This improved data access allows them to gain a clearer

understanding of their risks and standings, promoting an
environment conducive for sustainable growth. Arguably, the
majority of a company’s ESG footprint lies within its supply
chains. Having access to data across the value chain for
companies and asset managers investing in those companies is
crucial, as any changes within the value chain can significantly
impact the ESG risk and rating of the company and investment.
Ensuring traceability throughout these supply chains will help
assess the carbon footprints, environmental impacts, and social
impacts of products, services, assets, securities, and entire
portfolios. Open finance will facilitate the accurate and faster
delivery of this data, enhancing one of the key challenges faced
by the industry and supporting the drive towards sustainability.

Figure 28: Open finance APIs provides a scalable integration of traditional and new business models

New Business Models Traditional Business Models

Non-FS Institutional
Players investors

Other FS Asset
Players Custody Managers

Financial
FinTechs Advisors

Source: PwC Global AWM & ESG Research Centre

34 | Open Finance: Genesis of a Revolution

Open finance and the future of the insurance industry
Some traditional players in the insurance sector are at a critical juncture with the
advent of open finance. The industry currently grapples with significant protection
gaps, estimated to be around USD 350bn in Europe alone, representing approximately
25% more than the total market size. In simpler terms, there is a substantial disparity
between what consumers require and what the insurance sector is able to provide.

This points to an underlying efficiency issue within the insurance industry. While it
is already challenging to meet all consumer needs profitably, this coverage gap is
widening, exacerbated by large-scale global trends such as climate change and
ageing populations. The growing difficulty in insuring pensions for increasingly long-
lived populations and providing coverage for properties against the rising frequency
and severity of natural catastrophes is putting additional strain on the industry.

Open finance has the potential to help close these coverage gaps. For instance, TPPs
offering embedded insurance often maintain closer relationships with consumers
than many traditional insurers, making them more responsive to customer needs. The
insurance sector can, therefore, harness these TPPs to enhance customer service.
Although open insurance is expanding rapidly, it still constitutes a small portion of the
overall industry. In 2024, embedded finance accounted for just 5% of Property and
Casualty (P&C) insurance distribution channels. However, this figure is projected to
rise to 19% by 2030, largely at the expense of traditional distribution methods such as
agents and branches.

Figure 29: Property & Casualty insurance (P&C) distribution channels in the EU, with forecasts (%)

30%
39% 37% 34%
45% 44% 43% 41%

28%
28%
28% 28%
28%
28% 28% 28%
8%
8%
8% 8%
8% 8% 15%
8% 8% 15%
15% 15%
15% 15% 15%
15% 19%
10% 12% 15%
4% 5% 6% 8%
2023 2024f 2025f 2026f 2027f 2028f 2029f 2030f
Embedded Direct Bancassurance Broker & Aggregators Tied agents & Branches
Sources: PwC Global AWM & ESG Research Centre; Munich RE

Open Finance: Genesis of a Revolution | 35

 Open finance will unlock selected insurance and customer over the next decade. Global life premiums are projected to
data that was previously siloed within individual organisations, grow by 2.9% in real terms in 2024 and 2.7% in 2025. In the
allowing third parties to utilise this data to better serve non-life sector, increasing rates, especially in personal lines, are
customers. However, consumer data related to life insurance, expected to boost premium growth by 3.3% in 2024, although
insurance-based investment products, and sickness and health this is anticipated to moderate to 3% in 2025 as insurance
insurance are excluded under FiDA. Nevertheless, when the prices stabilise and claims inflation decreases. In a mature and
vast potential of open finance is combined with the enhanced competitive industry, differentiation and customer-centricity will
analytical capabilities brought by AI, the scope for innovation be key. Open finance will create opportunities for players to
within the insurance sector will expand significantly beyond successfully navigate the changing tides in the coming years.
current levels. Traditional players that fail to adapt to this new
model may find their coverage gaps widening further and Open insurance aims to transform the sector by fostering
their market share diminishing, as newer entrants offer more transparency, boosting efficiency, and improving customer
customer-centric, data-driven solutions. experiences through leveraging data flows. The adoption and
application of open finance within the insurance industry are
The insurance sector has shown robust performance in recent already underway, with major insurers exploring how to utilise
years, with the industry expected to grow by 5.5% annually large data flows being transferred across digital ecosystems.

Figure 30: Global real premium growth

4.4
3.6 3.9
3.2 3.3
2.8 2.7 2.6 2.9 2.7
2.6

1.2
0.8

Total Non-Life Life

-0.6

-3.8
2021 2022 2023 2024e 2025f
Sources: PwC Global AWM & ESG Research Centre; Swiss Re Institute, sigma 3/2024

Distribution beyond traditional markets

The concept of embedded insurance is well-established. particularly in the P&C segment, growing by a 31% CAGR from
Insurers have been selling policies through affinity relationships USD 39bn in 2019 to USD 116bn in 2023. This trajectory is
and business partnerships, such as offering insurance alongside expected to continue, with the market projected to grow by a
other products or services during transactions. This segment CAGR of almost 30% to reach USD 722bn by 2030.
is growing rapidly, with the embedded insurance market,

Figure 31: Global embedded insurance market size in the P&C sector, with forecast (USD bn)

722

560

436

339
265
207
154
116
65 87
39 49

2019 2020 2021 2022 2023 2024f 2025f 2026f 2027f 2028f 2029f 2030f
Sources: PwC Global AWM and ESG Research Centre; Simon Torrance

36 | Open Finance: Genesis of a Revolution

Embedded insurance operates through a seamless integration Platformisation
model, allowing insurers to offer products as an additional
service during a purchase process. However, the current model Similar to embedded insurance, insurance platforms have been
faces challenges such as data fragmentation across different increasingly used within the industry. As of the end of 2023,
systems, leading to siloed and inconsistent customer data. the global insurance platform market was worth USD 81.7bn,
The application of APIs will enable real-time data sharing and and it is expected to grow by a CAGR of 13.8% to reach USD
integration, allowing various industries to connect to providers 156.0bn by 2028. This growth is driven by increasing customer
of insurance data in real-time. expectations, demand for further digitalised services, and more
personalised experiences.
Also, as the demand for embedded insurance grows, scalability
becomes a concern. The use of APIs will provide the flexibility Open insurance APIs stand to revolutionise the way insurers
and scalability needed to handle increased transaction volumes operate and engage with customers via these platforms. The
and penetrate new markets. Further, with embedded insurance data-sharing capabilities of open finance will allow insurers
models’ seamless integration into various platforms allowing for access to real-time data, enhancing underwriting accuracy,
easier and faster scaling, they would be able to leverage open risk mitigation, and the development of innovative products.
insurance APIs to provide automated coverage as an add-on Current insurance platforms that support clients in comparing
to product sales that are tailored to customers’ specific needs. policies from numerous providers and choosing the right one
This will lead to the introduction of new services within the are expected to extend their operations to offer more holistic
ecosystem that combine insurance products with value-added advice across other financial products such as banking and
offerings from non-insurance business partners. asset management. Open APIs will enhance their operations by
providing real-time access to client data, eliminating the need
Open insurance will enable insurers to expand their footprint for manual input and resulting in a more seamless customer
beyond traditional markets by partnering with FinTechs, experience. Open-insurance-backed platforms will enable
insurtechs and other innovative players. These partnerships insurers to access data that facilitates tailored recommendations
will allow insurers to easily integrate their products with the and proactive risk management solutions, potentially leading to
non-insurance offerings of their business partners, providing a improved customer satisfaction.
broader and seamless customer experience for their clients.

As insurers reach and attract new segments of the market Figure 32: Insurance platforms market size with forecast
through open insurance, this will create a “network effect” (USD bn)
through which they will increasingly attract more potential
business partners. In this context, early adopters of open
insurance for this purpose will benefit significantly from a first CAGR 156
movers’ advantage. 13.8%

81.7
65.9

2022 2023 2028f

Sources: PwC Global AWM & ESG Research Centre; Markets and Market

Open Finance: Genesis of a Revolution | 37

 Insurance-as-a-service On demand insurance will thrive
Launching insurance initiatives often involves significant costs Open insurance will support the development of on-demand
and time, deterring many startups. Insurance-as-a-Service insurance products that can be renewed or cancelled as
(IaaS) simplifies this process, allowing insurance companies needed. This model is particularly appealing for the gig
and insurtechs to offer businesses the necessary tools to enter economy, short-term, and high-value activities. This adaptability
the market swiftly and economically. IaaS grants access to caters to the diverse needs of modern consumers and helps
advanced technology and resources, facilitating a smoother and insurers provide targeted solutions in an increasingly agile
more efficient launch. market. Real-time data access will also enable continuous
updating of insurance policies, ensuring they remain aligned
Businesses can now easily integrate with an IaaS provider with the customer’s current situation and needs.
through insurance APIs, made possible by the open finance
ecosystem, allowing them to quickly launch and offer new or
additional insurance products directly through their own website
and brand. APIs also simplify the claims process by enabling
quicker access to relevant financial data, reducing the need for
extensive documentation and manual verification. For instance,
in the event of a car accident, insurers can instantly verify the
policyholder’s financial and payment information, assess the
claim against the policy in real-time, and initiate the payout
process almost immediately, improving customer satisfaction
and operational efficiency.

38 | Open Finance: Genesis of a Revolution

Enhancing operational efficiency across the Insurtechs to expand API adoption and drive
insurance value chain open insurance innovation
Utilising APIs and real-time data sharing will enhance various The global insurtech market is projected to grow at a CAGR of
processes across the insurance value chain. Access to a wider 38.8% from USD 19 bn in 2023 to USD 497 bn by 2033.17
range of data sources will facilitate quicker, more informed
decision-making, leading to faster policy issuance and Insurtechs will play a pivotal role in driving the adoption and
claims processing, reduced development and maintenance integration of APIs, fostering additional partnerships, creating
costs, minimised data duplication, and the implementation of innovative products, and developing new sales and distribution
automated straight-through processing, boosting transaction channels. By integrating into every aspect of the value chain,
speeds and overall efficiency. Open insurance will foster a insurtechs have the potential to resolve numerous challenges
collaborative environment, allowing insurers to draw from their faced by insurers, leading to higher adoption rates. The flexibility
network of business partners’ skills and resources, eliminating of standalone tech solutions will enable faster innovation
bottlenecks caused by legacy systems. and reduced time to market, enhancing the efficiency and
responsiveness of the insurance industry. With the widespread
Ultimately, these advantages are likely to result in considerable adoption of APIs in banking, the insurance sector is likely
cost savings in insurers’ operations. Additionally, these to follow suit. Projections indicate that the number of open
operational efficiencies are expected to cascade throughout the insurance users globally could reach 75 million by the end of
insurance value chain, benefiting not only insurers but also their 2024, with Europe potentially accounting for 50% of these
business partners and service providers. users.

Figure 33: Insurtech market size 2023 to 2033f (USD bn)

497

358

258

186
134
96
50 69
26 36
19
2023f 2024f 2025f 2026f 2027f 2028f 2029f 2030f 2031f 2032f 2033f
Sources: PwC Global AWM & ESG Research Centre; Precedence Research

17. Precedence Research, Insurtech Market Size, Share, and Trends 2024 to 2033,
June 2024

Open Finance: Genesis of a Revolution | 39

 3
Challenges in
open finance
Despite the widespread sentiment that open finance heralds a
new era of financial innovation and customer empowerment,
this innovation does not come without its challenges. The
shift towards open finance will compel financial institutions,
market participants, and regulatory bodies to navigate a host of
challenges to unlock its full potential.

Risk of misuse of personal data

In an open finance environment, the information-sharing field is levelled, allowing
personal and financial data to be shared more widely among different entities.
This increased data mobility heightens concerns about the security of customer
data. However, frameworks like FiDA specifically exclude certain types of sensitive
data related to creditworthiness assessments of consumers, sickness and health
insurance and life insurance products. While this reduces concerns around algorithmic
discrimination or exploitation of behavioural biases in these areas, there are still
security concerns related to other shared data such as personal identifiers, which must
be properly managed to protect consumers.

The misuse of data can have serious consequences. Financial fraud and identity
theft are some of the most immediate and damaging effects. Beyond that, breaches
of privacy can lead to the erosion of consumer trust, which is crucial for financial
institutions. To mitigate these risks, financial institutions must adopt robust data
governance frameworks that ensure data is used ethically and securely.

Lack of standardisation
The long-term success of open finance will hinge on achieving a high degree of
interoperability, enabling seamless data sharing among service providers across
various sectors and countries. However, the absence of common industry or
government-led standards creates significant operational challenges. Diverse data
formats and APIs complicate the integration of financial services across various
platforms, leading to inefficiencies, increased costs, and delays in service delivery.

Establishing industry-wide standards is critical to overcoming these barriers. In

response, we have seen the emergence of data aggregators whose role will be
instrumental in the operationalisation of open finance globally. Standardisation efforts
should therefore focus on creating interoperable systems that facilitate smooth data
exchange while maintaining high security levels.

40 | Open Finance: Genesis of a Revolution

Greater transparency and control High implementation costs
Consumers demand greater transparency and control over Implementing open finance initiatives involves significant costs
their financial data in an open finance ecosystem. They want for financial institutions. These costs include investing in new
to know how their data is being used, who has access to technologies, upgrading legacy systems, and training staff.
it, and for what purposes. Meeting these demands requires Ensuring regulatory compliance also constitutes a significant
financial institutions to implement and adhere to transparent cost burden requiring investment in legal and compliance
data usage policies and invest significantly in technologies that teams who must maintain meticulous attention to detail and
provide consumers with tools to manage their data preferences. continuously monitor data sharing and financial transactions
Moreover, this increased transparency can create heightened to meet established regulatory standards. Furthermore, the
pressure across the financial services industry to enhance value ongoing need for innovation to stay competitive adds to the
and competitiveness, as customers are now better positioned financial burden.
to compare services and switch providers based on their needs
and preferences. To manage these costs, financial institutions must adopt
a strategic approach that prioritises investments with the
To address these pressures and build strong customer highest potential returns. We expect financial institutions to
relationships, financial institutions should educate their explore cost-sharing arrangements, such as joint ventures or
consumers about their rights and the measures in place to consortiums, to spread the financial burden across multiple
protect their data. By doing so, they can foster trust and entities. A focus on scalable solutions can also help mitigate the
confidence in the open finance system, ensuring that customers impact of increased costs.
feel secure and well-informed in their interactions with financial
services. Customer selection
Competition and disruptive market structures Open finance necessitates careful customer selection processes
to ensure that services are tailored to the right individuals.
Open finance promotes increased competition by lowering Financial institutions must therefore balance inclusivity with
barriers to entry for new players, particularly FinTechs. While the need to mitigate risks associated with offering services to
this can drive innovation and improve services for consumers, it high-risk customers. This challenge is particularly pronounced
also disrupts traditional market structures. Incumbent financial in lending and insurance, where accurate risk assessment is
institutions will face pressure to adapt their business models crucial.
and invest in new technologies to remain competitive. This influx
of diverse offerings and varied service standards also creates Advanced data analytics and machine learning algorithms
competition risks if open finance leads to unequal access to can enhance customer selection processes by providing
data and sharing between financial institutions and TPPs or deeper insights into customer behaviour and risk profiles.
if the costs of setting up and running APIs and open finance These technologies enable institutions to make more informed
services are unfairly shared. decisions, offering personalised services while managing
risk effectively. Moreover, transparent criteria and clear
This competitive landscape therefore necessitates a strategic communication with customers can help manage expectations
shift towards collaboration rather than confrontation. We expect and foster trust.
incumbent banks to partner with FinTechs to leverage their
technological expertise, while FinTechs could benefit from The journey towards a fully realised open finance ecosystem
the established customer base and regulatory knowledge of has its challenges. However, by addressing these issues
incumbents. Such partnerships can lead to the development of proactively, financial institutions can gain significant benefits
innovative financial products and services that enhance overall for themselves and their customers. Robust data governance,
customer experiences. industry-wide standardisation, enhanced transparency, strategic
collaboration, prudent cost management, fortified data security,
and advanced customer selection processes are essential
components of a successful open finance strategy.

Open Finance: Genesis of a Revolution | 41

 4
Embracing open finance:
Strategies for success
As open finance becomes entrenched, it will transform the
financial landscape beyond recognition. We are at the genesis
of a revolution that will compel industry players to reshape their
business models, leading to the decline of some incumbents and
the emergence of new giants. The transition to open finance is
set to unlock significant opportunities for innovation, enhanced
customer experiences, and competitive advantage.
To fully harness the potential of open finance, financial institutions
must adopt a strategic approach, addressing several critical
areas. Below are key considerations for navigating this evolving
landscape:

1. Strike the right strategic balance

Financial institutions have multiple strategic pathways available when implementing
open finance. These include consolidating services or data on B2C or B2B platforms—
whether they are participants or creators of these platforms—or offering their services
through TPPs via embedded finance or Finance-as-a-Service (FaaS). While these
models can be pursued concurrently to diversify operations, institutions must carefully
evaluate when and how to consolidate services or integrate with TPPs. The optimal
strategy will often be tailored to the institution’s specific needs and market context.
Effective navigation of these options is crucial for achieving success in open finance.

42 | Open Finance: Genesis of a Revolution

2. Adopt a robust data governance framework 4. Leverage cross-border API integration
If personal data is not secure and is misused, it not only Although the financial sector is gradually embracing open
compromises the integrity of the information but also finance, many open data solutions remain confined to individual
misrepresents the consumer and undermines essential national markets. In contrast, other open banking solutions,
principles of consumer protection. To address this issue, such as account aggregation and embedded payments, are
financial institutions and TPPs must prioritise both data security more advanced and widespread. The cross-border dimension
and ethical data use within the open finance landscape. of open finance presents an exciting opportunity for financial
Implementing rigorous access controls, continuous monitoring institutions to innovate and differentiate themselves. Future open
for suspicious activities, and comprehensive encryption finance ecosystems will need to accommodate international and
protocols are crucial steps in safeguarding sensitive information. cross-currency transactions and operations, requiring platforms
We emphasise the burden of care that data receivers must that can navigate diverse regulatory environments.
uphold in the handling and usage of data. Although regulatory
compliance is essential in mitigating such risks, financial 5. Anchor your customer base and pursue new
institutions must also go beyond mere compliance to build prospects
comprehensive data protection strategies. These strategies
must address the risks of inappropriate data handling or misuse As new offers emerge, promising improved service and greater
and foster a culture of data privacy among employees. convenience, both consumers and businesses are likely to
gravitate towards these innovations. This shift presents a real
3. Anticipate intra-industry competition risk of marginalisation for firms, potentially relegating them to
mere product providers while large data aggregators could
Open finance not only lowers barriers for new entrants but also usurp the established customer relationships. To counteract this
enables established financial services companies to expand threat, institutions must strategically leverage the opportunities
into service areas that were previously beyond their reach. As created by new regulations and strengthen their connections
customer data becomes more accessible, banks, payment with customers. By actively engaging with customers and
companies, AWM firms, and insurers can more easily offer offering personalised, high-value solutions, firms can ensure
specialised services within their industry. This development is they remain a pivotal part of their customers’ financial lives. This
likely to lead to the emergence of financial institutions capable approach will help in retaining existing clients and also position
of providing comprehensive service offerings within banking, incumbents as leaders in delivering tailored, high-value services.
payments, AWM, or insurance. Consequently, specialised
providers may face challenges as they compete with full-service
competitors.

Open Finance: Genesis of a Revolution | 43

 Contact us

Tom Theobald Chris Hollifield

CEO Head of Business Development
Luxembourg For Finance Luxembourg For Finance
[email protected] [email protected]

Dariush Yazdani
Partner, Global AWM & ESG Research Centre Leader
PwC Luxembourg
[email protected]

Press Contact
Jonathan Westhead
Head of Communications
Luxembourg For Finance
[email protected]

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Open Finance: Genesis of a Revolution | 45
 Notes

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Open Finance: Genesis of a Revolution | 47
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