Open Banking’s Way Forward Involves More Data Sharing, Not Less

Despite a slow start in the United Kingdom and much of Europe, open banking is catching on, and this progress will likely accelerate rather than slowing down, Pinar Ozcanprofessor of entrepreneurship and innovation at Saïd Business SchoolOxford University, told PYMNTS. 

Ozcan, who also serves as academic director of the Oxford Future of Finance and Technology Initiative, said that while open banking struggled early on, the region is now embracing the concept. In simple terms, open banking is the process of financial institutions opening data for regulated providers to access, use and share. 

“We are starting to see that open banking is being used by important entities … be it government or large institutions are starting to realize that open banking has a lot to offer … I expect usage will keep going up,” she said. “However, we are not there yet, and we need another few years for open banking … for the frictions to go away. Slowly, we’re going to open up the data.” 

One of the of the most important trends right now is embedded finance, said Ozcan. That’s when non-financial companies offer consumers or businesses access to credit through their technology platform. It can be used in a way that allows these non-financial institutions to integrate financial services.

“I think [that’s] something that we’re going to see more of in 2022 and in the years after,” she said. 

Regulation, Competition, Innovation  

The U.K. and Europe have both imposed legal mandates relating to open banking, and that could be viewed as a success story so far.

“If you are trying to boost innovation by getting new players in and giving them a chance, there’s naturally going to be resistance at the beginning,” she said. “That’s why it’s important to be regulatory-led, because the data resides in large financial institutions that may not have the incentives to open up their data.” 

It will be challenging to encourage large institutions to change, Ozcan noted, as they need to see the benefits of being nimble and opening their own resources which they value.

“Especially at the beginning, in order to make sure that data exchange starts to happen and for all the players to realize that this is a good thing,” she continued.

Still, it’s important for regulators not to have 15 different standards in the markets, which would slow things down, Ozcan added. 

Where the data resides and how it is exchanged is key, she noted. When financial data is available to other institutions, it can be used to offer customers better services and tailored offerings based on education, health and energy data.

“With your consent, [it] can and should be made available to the other players in the industry, as well as to other players across industries,” Ozcan added. 

Big Tech Access to Data 

Some experts suggest Big Tech would love to have access to data, but traditional financial institutions and FinTechs are worried. Ozcan said it’s already happening, as evidenced by how Apple and Google have managed to use such data successfully. 

“We have to admit that COVID-19 has helped them because many people have switched to mobile payments with Google or Apple Pay,” she said.  

Big Tech already has payment data and information about the kind of things consumers purchase and what stage their life is at, she added.  

Amazon has a very strong retail platform, which means it has an incentive to strengthen the platform by providing loans, she said. Similarly, Google is seeking data because their monetization is not a retail platform, but advertising.  

“They’re going to want to gather as much data as possible about us and combine it with other data that might have from your Fitbit,” Ozcan said. “Not all Big Tech is the same, but all Big Tech has interest in being in finance and getting to places in finance that makes sense for their business model.” 

Since the giant tech companies are already gathering this data, some wonder if they care about open banking. However, Ozcan said open banking would give them access to even more valuable information. 

For example, she said, homeowners don’t pay their mortgage with Apple or Google Pay. The same is true for utility bills. Such data is essential to understand someone’s financial situation. As a result, Ozcan said Big Tech has much to gain from open banking by tailoring products and services for consumers. 


Amid trends of datafication — meaning the fact that there’s plenty of electronic data available about our behavior and lives — this is unstoppable. If it’s not Big Tech, someone else is going to “data-fy” our lives. 

The job for regulators won’t be easy because they don’t want to stop the data processing, Ozcan said, which employs artificial intelligence (AI) and machine learning (ML). At the same time, regulators must prohibit industries from becoming a monopoly, with data only going to one entity, she said. 

“Regulators are worried that data is getting concentrated in Big Tech, and when data becomes the main weapon for competition, then other competitors don’t have a chance,” Ozcan said. This is why open banking is important, because it democratizes the industry with more access to data.

“However, Big Tech doesn’t have to share other types of data,” she continued. “Finance is only one small type of the data that they have. So, this means that they will always be stronger, because they’re gathering and processing data across industries.” 

What’s Ahead

Ozcan said she expects to see more integration between industries. Consumers will stop thinking about finance as a separate industry, and it will become more integrated in our daily lives.

“I don’t expect that this is going to be established in the future in the next two years, but there’s going to be more and more of that as more players start to see that open banking is working and therefore, get interested in accessing the data,”  she said.