A coalition of international organizations has introduced new guidelines for public authorities to leverage open finance in enhancing digital financial services and innovation. These guidelines aim to broaden the use of financial products and reach the 1.4 billion people worldwide who lack access to basic transaction accounts.
Her Majesty Queen Máxima, the United Nations Secretary-General’s Special Advocate for Financial Health (UNSGSA), emphasized the potential of open finance to benefit those who are financially excluded or underserved. She stated, “While we have made great strides in expanding access to financial accounts, much work remains to ensure that individuals are actively using and benefiting from a broad range of financial services that meet their complex financial needs, including savings and insurance products.”
World Bank Group President Ajay Banga highlighted the transformative potential of open finance, saying it could significantly aid small businesses and women entrepreneurs. “Open Finance done right could be a game changer, making it possible to bring financial services to people who traditionally have had none,” he said.
In an open finance system, customers can consent for their data to be shared among financial institutions without bilateral contracts. This approach reduces information asymmetry and fosters competition by enabling innovative products and services. However, increased data exchange heightens risks related to data security and privacy.
IMF Managing Director Kristalina Georgieva noted regulatory challenges posed by new market entrants: “The entry of new financial players can boost innovation and competition, but it also creates regulatory challenges.” Agustín Carstens from the Bank for International Settlements stressed the importance of regulation alongside innovation: “Open finance holds great promise... But the benefits can only be realized if accompanied by adequate regulation and safeguards.”
These guidelines were developed under "Key Considerations for Open Finance" by CGAP with collaboration from BIS, IMF, UNSGSA's Office, and the World Bank.