Summarise the article with your AI
Here you can read:
Open banking gives businesses access to payment account data through regulated APIs. Open finance on the other hand aims to expand this to all financial products including savings, pensions, investments, and insurance. These initiatives are being driven in the UK by the Data (Use and Access) Act 2025 and the FCA's Smart Data roadmap. For corporate treasury teams, open banking and open finance mean moving from basic bank feeds to actually seeing the full financial position in real time.
What is open banking?
If we had to define what open banking is, it’s the way people and businesses are able to share access to payment data from their bank accounts with trusted apps and services. It's secure, regulated, and works through standardised APIs. The Financial Conduct Authority oversees this framework in the UK, which came out of the Payment Services Directive 2 (PSD2) and now operates under the UK's Payment Services Regulations (PSR).
Open banking in the UK has reached more than 16 million active users, with payments growing continuously. There is a limitation, however: open banking currently covers only payment and current accounts, which represents a fairly narrow slice of most companies' financial lives.
What can businesses do with open banking?
The main use cases for businesses are: payment initiation, bank feeds that connect to accounting software, automated reconciliation of current account transactions, and faster credit checks using real transaction history.
For corporate treasury teams, this can mean better visibility of cash positions and smoother payment workflows through real-time treasury solutions that connect to banks through open banking APIs.
What is open finance?
Open finance takes the open banking concept and expands it to a wider range of financial products like savings accounts, pensions, insurance policies, investment portfolios, mortgage accounts, credit cards and loans, among others.
Why this matters for businesses
Currently, a significant amount of information regarding a company's financial position is compiled manually, using data from different sources and often linking and consolidating them in Excel. With open finance and the right tools, a finance team can build a picture of the company's financial health automatically, with data flowing into one place through secure APIs.
Open Banking vs Open Finance: 5 Key Differences
Open banking represents the current status quo, whereas open finance illustrates the ideal future state: :
| Feature | Open banking (current) | Open finance (where it’s heading) |
| Data scope | Payment accounts only | Expected to include savings, pensions, insurance, investments, mortgages, credit |
| Regulation | UK Payment Services Regulations | Data (Use and Access) Act 2025 |
| Primary use | Payment initiation and bank feeds | The aim: broader financial management |
| Business value | Automated reconciliation | Potential for real-time visibility of total liquidity |
| Connectivity | Standardised APIs for banks | Goal: APIs across banks and non-banks |
The regulatory difference between open banking and open finance
Open banking originated from PSD2, which came into force on 13 January 2018. Open finance in the UK is expected to operate under the Data (Use and Access) Act 2025, which became law in the middle of last year.. The rollout is happening in stages, with full implementation expected around mid-2026.
The Act would introduce "smart data schemes" governing: the parties sharing customer data, the scope of the data shared, the terms and timing of the sharing, and the methods by which that data is protected.
How open finance could change corporate treasury
For many CFOs, liquidity management sits near the top of their priorities. Not just cash in the bank, but total liquidity.
Potential benefits of open finance for business
More complete financial visibility: Instead of logging into a dozen different portals, you could see everything in one dashboard. This visibility is ideally in real-time, more accurate, and more comprehensive.
Enhanced liquidity management: You could track savings accounts, short-term investments, available credit lines, and upcoming debt obligations all at once. Cash forecasting would become more accurate as it pulls data from all your financial data sources, rather than being limited to current accounts.
Better decision-making: When you know your total liquidity position across all financial products, you may be able to make smarter decisions about capital allocation, investment timing, and debt management.
Why finance leaders should care: Beyond the bank feed
Most treasury teams today rely on bank feeds that show only the balances held in current accounts.. But your company's actual financial position includes a lot more: term deposits, investment accounts, outstanding loans, pension obligations, credit facilities.
Open finance wants to bring all of this into view. For CFOs and treasury professionals, this shift could mean:
- Real-time visibility of debt obligations alongside cash balances
- Investment account data flowing into the same dashboard as operational accounts
- More accurate working capital calculations that account for all liquid assets
The difference between open banking and open finance is essentially the difference between seeing a partial view and gaining full, comprehensive visibility.
The UK's Smart Data Programme
The UK is taking a structured approach to open finance through its Smart Data programme. Smart Data enables the secure sharing of customer data with authorised third parties, with customer consent. The government's ambition is to build upon open banking, extending these principles across the UK economy.
The FCA's open finance roadmap
The FCA plans to publish its open finance roadmap in March 2026. Here's what's happening already:
Smart Data Accelerator: A testing environment where firms can develop and test open finance solutions before going live.
TechSprints on SME finance and mortgages: Focused innovation sprints in two priority areas: small business lending and mortgage applications.
What this might look like in practice
The FCA has identified SME lending and mortgages as priority areas. Here's why.
SME lending: Potentially faster access to capital
Small and medium-sized businesses often struggle with lengthy loan applications. With open finance, businesses could share comprehensive financial data with greater ease.Lenders would be able to view bank accounts, outstanding loans, investment accounts, and payment history.Credit assessments could happen faster and potentially more accurately.
Mortgages: Less paperwork
Open finance could simplify property financing. Applicants could grant access to relevant financial data, and lenders could verify income, savings, and financial commitments automatically. Affordability assessments could become more accurate, and the application process could speed up.
Getting ready for open finance
The shift from open banking to open finance represents a real change in how businesses access and use financial data. For treasury teams, the implications are worth paying attention to.
The regulatory framework is taking shape. The Data (Use and Access) Act is law. The FCA plans to publish its roadmap by March 2026.
This article has been prepared using sources from the Financial Conduct Authority (FCA), GOV.UK, Open Banking Limited (OBL), UK Finance, and the Payment Systems Regulator (PSR).
