On 17 July 2025, the Digital Regulation Cooperation Forum (DRCF) issued a blog on the Future of Open Finance and Smart Data. The Financial Conduct Authority (FCA) and the Information Commissioner’s Office (ICO) have collaborated through the DRCF’s Horizon Scanning and Emerging Technology (HSET) to offer insights on the future of Open Finance, which will support innovation and competition in financial services, allowing people to derive benefit from their own personal data, and require strong data protection compliance to ensure trust.
In March 2025, the FCA hosted an Open Finance Sprint, in which the ICO participated, taking the opportunity to build on findings from this research. Open Finance presents opportunities to enhance competition, stimulate innovation and improve inclusion by helping providers to offer more tailored products and services to better serve the diverse needs of consumers, building on the success of Open Banking.
Smart Data and the Role of Regulation
The UK’s framework for Smart Data is central to the vision of Open Finance. The recently enacted Data Use and Access Act sets out a framework for access, sharing and use of customer data. Statutory Instruments will be needed to introduce specific sectoral Smart Data schemes including Open Finance.
The FCA’s strategy outlines its commitment to building regulatory foundations for Open Finance, rooted in the principles of Smart Data. The ICO has set out its support for Open Finance schemes which allow customers to move their data between services, as enablers of competition and growth. The ICO’s role will be vital in ensuring future Open Finance schemes protect people’s information rights, as Smart Data continues to grow.
Technologies Shaping the Future of Open Finance
Application Programming Interfaces (APIs) have been used to support Smart Data and data-sharing initiatives globally. APIs can facilitate real-time, secure and trusted data exchange between services, which can enable innovation, competition, and greater consumer choice. This will likely be integral to Open Finance.
AI
AI has the potential to:
- Automate data cleaning and preparation;
- Enhance fraud detection;
- Assess creditworthiness of individuals and SMEs;
- Deliver personalised insights, financial advice and product recommendations;
- Help consumers complete tasks such as opening an account or switching providers.
Distributed Ledger Technologies (DLT) and Smart Contracts
- Smart contracts could automate administrative tasks and allow consumers to define data-sharing preferences in a transparent manner.
- DLT may improve data integrity and security, permanence of records and consensus-based validation.
Digital Identity Verification
Verifiable digital identities are expected to be important for consumer trust and streamlined data access.
Next steps
- The FCA: The FCA’s 5 year strategy confirms its commitment to building the regulatory foundation for Open Finance.It is also taking part in a cross-border data sharing test led by the Bank for International Settlements (Project Aperta).
The FCA is launching a Smart Dara Accelerator, which will facilitate the testing of use cases, encourage the development of solutions and help shape regulatory policy for Open Finance. The accelerator will drive progress on Smart Data initiatives and support the FCA in setting out its Open Finance roadmap by March 2026. - ICO: the ICO’s Innovation Hub will continue to work with the FCA’s Innovation team to provide free, tailored data protection support to financial services firms innovating with personal data.
The ICO is continuing to provide advice and support to the Government as it works to establish a framework for digital identity schemes in the UK, to streamline verification of identities and attributes in the Open Finance sector.