European fintechs join forces to make open finance a reality
A number of fintechs have joined forces to develop and promote an open finance ecosystem in both the UK and EU underpinned by Application Programming Interfaces (APIs).
The Open Finance Association (OFA), which counts Plaid, GoCardless and TrueLayer among its members, wants to usher in an era of open finance in much the same way the EU’s 2016 Payment Services Directive (PSD2) did for open banking.
As the next step in open banking, the non-profit trade association hopes open finance will give businesses and consumers “greater control and visibility of their economic lives”.
Operating out of Brussels and London, the OFA has three key objectives: enable consumers and businesses to access and use their financial data via third-party providers; develop an instant payment method based on open payments; and promote a “well-functioning” open finance ecosystem.
The OFA has appointed Nilixa Devlukia as chair of the organisation. She has previously held senior roles at the UK’s Financial Conduct Authority (FCA) and the European Banking Authority.
Devlukia says industry, policy makers and regulators must come together to “make open finance a reality”.
Devlukia adds: “Through the promotion of an API-focused agenda in both payments and data, OFA aims to promote a healthy and sustainable fintech ecosystem, in which consumers and businesses all benefit from improved, innovative services.”
The need for collective efforts to make open finance a reality come as governments, regulators and industry in the UK and EU have begun to think about how such an ecosystem would work.
The European Commission has recently completed a public consultation on open finance with a legislative initiative hopefully to follow in 2023.
In the UK, open finance has been on the table since the FCA’s Call for Input in 2019 and a new ‘Smart Data’ bill introduced in July that could allow sector authorities to create a new open finance framework.
The OFA’s current members are Armalytix, Crezco, finAPI, GoCardless, Nuapay, Ordo, Plaid, Token, TrueLayer, Volt, Worldline, Worldpay and Yapily.