Unlocking Finance: Open Banking and the Quiet Revolution in Data Access

For decades, banks held exclusive rights to their customers’ financial data. Every deposit, late payment, or balance served as internal fuel for pricing loans, tailoring services, and deepening relationships. But now, a regulatory shift known as Open Banking (OB) is giving that power back—to customers. A recent study by Filippo De Marco (Bocconi Department of Finance), Tania Babina (University of Maryland), Saleem Bahaj (University College London), Greg Buchak (Stanford University), Angus Foulis (Bank of England), Will Gornall (University of British Columbia), Francesco Mazzola (ESCP Business School Turin), Tong Yu (Imperial College London) published in the Journal of Financial Economics by offers the first global empirical analysis of this phenomenon.

Going global

The authors assembled a dataset covering 168 countries—accounting for over 99% of world GDP—and found that 49 had already implemented OB policies by 2021. Adoption varies widely: Europe leads the charge with highly structured regulations, while regions like Latin America and Asia are experimenting with broader scopes.

Key driver? Consumer trust. In countries where people feel safe sharing data with financial technology firms (“fintechs”), OB adoption is both faster and stronger.

A tale of two use cases

The UK’s experience is particularly rich: thanks to early adoption, researchers could study both consumer behavior and small business lending using microdata.

Two main use cases for OB emerged. The first, dubbed Advice OB, allows consumers to grant fintechs access to their transaction histories to receive financial planning tools or savings recommendations. The second, Credit OB, enables alternative lenders to assess creditworthiness using a borrower’s real-time bank data—helping consumers with “thin” credit files gain access to loans. Importantly, the researchers found little overlap between these two groups: they serve different needs, and therefore different demographics.

Better access, more innovation

The benefits are clear. Consumers using OB tools in the UK report greater financial literacy and easier access to credit. Small businesses eligible to share data formed more lending relationships with non-bank lenders—and often secured lower rates.

“Open banking empowers bank customers to share their financial transaction data with other financial service providers.”

The study finds that countries implementing OB policies experienced a sharp increase in venture capital investment in fintech firms, particularly those offering data-driven products like digital credit, regulatory technology, and financial advice apps. Consumer trust emerged as a key predictor: countries where individuals felt comfortable sharing their data with fintechs saw the strongest post-OB surges in innovation. And the timing is clear: VC investment jumps after OB adoption, not before.

The competition–inclusion tradeoff

Yet the picture isn’t entirely rosy. A key insight from the authors’ economic model shows how data sharing may unintentionally penalize privacy-minded users.

“The credit OB use case can have negative distributional consequences… users who opt out are inferred to be hiding something.”

That inference can lead to higher costs or exclusion, even for those with good credit who simply prefer not to share.

Still, the model finds OB to be welfare-enhancing overall, especially when used for advice products. Even those who opt out gain from broader competition, though not as much as those who share.

The road to Open Finance

Open Banking is just the beginning. Many countries, including the UK and Brazil, are already considering Open Finance frameworks that extend data access to pensions, investments, and insurance.

As the authors emphasize, the shift to data democratization has the power to reshape the entire financial sector—but only if designed with care.