The Future of Open Banking: Transforming Compliance into Competitive Advantage
What is Open Banking?
Open Banking refers to the access to personal data and product data by third parties with the customer's consent, as well as the ability of customers to trigger transactions through third parties. It enables consumers to select the most suitable service provider for their banking and payment transactions, without being dictated by a particular service provider, while maintaining control over their personal data.
Open Banking has become a popular concept in banking and payments due to the opportunities it presents, following the implementation of the PSD2 regulation and the UK’s Open Banking frameworks. However, almost a decade after the Open Banking innovation, the sector isn’t where it was predicted to be.
In 2025, Open Banking is no longer just a regulatory mandate; it has become a business imperative for banks and financial service providers. By 2025, it became a catalyst for innovation, competition, and new revenue streams in the financial services sector. Yet for many banks and payment providers, the path to capturing their full potential remains riddled with challenges: compliance complexity, consumer mistrust, and the operational inertia of legacy systems.
The key to success lies in reframing these challenges as strategic opportunities and utilizing open data and embedded finance to achieve this.
Regulatory Pressure and Innovation: Finding the Balance in Open Banking
The UK and EU continue to lead the charge in open finance, with regulatory frameworks like the PSD3, the EU AI Act, and the forthcoming Financial Data Access (FiDA) Regulation shaping the landscape. The Open Banking Implementation Entity (OBIE) has set the pace, but new regulations bring both higher compliance demands and new market possibilities.
For banks and fintechs, the challenge is to stay agile. Those who can turn compliance into a competitive edge by building trusted, secure, and API-driven financial ecosystems will be best positioned to lead. Regulatory adherence is no longer a checkbox exercise; it’s the foundation for customer loyalty and scalable growth.
Bridging the Open Banking Trust Gap: From Mistrust to Mass Adoption
Despite growing adoption, consumer trust in open banking remains fragile. A recent Mastercard report on building trust in the age of open banking reveals opportunistic results, showing that 76% of banking clients connect financial products and third-party provider tools to banking platforms to streamline financial tasks. In comparison, 66% of customers trust sharing their financial data with banking partners and 56% with credit card companies.
The challenge is that the term "open banking" is widely misunderstood, resulting in a gap in the market. The average banking client is often unclear about what open banking entails, particularly in terms of connected platforms for digital payments.
The solution? Transparency and education. Open banking providers must actively communicate how data is used, how privacy is protected, and how customers can benefit. Open data transparency, combined with technologies such as consent dashboards, real-time alerts, and personalized financial insights, can turn skepticism into trust.
In addition to closing the information gap, open banking providers should also clearly communicate the benefits and use cases to their customers. What is the customer data used for? How can open banking enhance the banking performance for customers? Unless these questions are clearly answered, the consumers are likely to remain skeptical and indifferent to open banking.
Open Banking’s Global Reach: Local Compliance, Global Opportunity
Open Banking is inherently borderless. German banks, for example, cannot think locally on their own. International frameworks from the Bank for International Settlements (BIS) and global standards from bodies such as the Basel Committee must be considered alongside local regulations.
Open banking strategies that integrate both domestic and cross-border compliance can unlock new customer segments, including SMEs, gig economy workers, and underserved demographics who demand more control over their finances.
Security concerns remain a top barrier to adoption, but they can also become a growth lever. Banks and payment service providers that go beyond minimal compliance to offer proactive, user-friendly security (such as biometric authentication, granular consent management, and fraud detection powered by AI) can differentiate themselves in a crowded market.
Embedding security into the user experience, rather than making it a hurdle, will be key to winning customer trust and regulatory approval.
The Rise of Personalised, Open Banking-Enabled Finance
Open banking marked a milestone of 10 million users in 2024, presenting a positive opportunity for bank executives to reach more willing consumers; however, the global open banking opportunity remains largely untapped. Despite the developments in AI and open banking, studies reveal that three-quarters of international banks aren’t “operationally ready” to engage in open banking, with traditional lenders lacking the tools of digital-first providers to offer highly personalized services to customers. Why do banks and fintechs miss the opportunity?
Open banking is not just about payments, it's about banking experiences. Consumers increasingly demand personalised financial advice, seamless budgeting, and instant credit access tailored to their lives.
Data-driven, personalised banking services, powered by open APIs and embedded finance, can transform customer relationships from transactional to relational. Institutions that utilize AI to deliver real-time financial coaching, predictive insights, and personalized offers will lead the next wave of banking innovation.
Financial service providers are highly encouraged to conduct market and consumer research to understand consumer demands, using trend analysis, or personalise open banking ecosystems using comparative analysis or capabilities analysis.
Consumers want open banking services and personalized financial management tools, such as budgeting apps and 24/7 financial advice. Banking partners can promote widespread conscious consumers by focusing on consumer demands.
Educating the Conscious Consumer: A Missed Open Banking Opportunity
Open banking adoption can be significantly accelerated by creating more conscious consumers; those who understand their data rights, actively seek out better financial products, and are empowered to make more informed choices. Financial institutions must invest in open finance literacy by implementing digital education campaigns, developing easy-to-understand data-sharing tools, and forming partnerships with consumer advocates. Making open banking benefits visible and relatable will be a key competitive differentiator.
Open banking can help consumers understand and manage their finances, whether using budgeting tools or sharing data with relevant products, apps, and services to take control of their online banking. However, the consumers are not fully aware of the benefits.
Delivering personalised financial advice and recommendations based on trends and customer sentiment analysis could help consumers use open banking services more confidently. Certain APIs can connect open banking and financial awareness, ultimately enhancing consumer understanding and decisions to gain more trust and educate customers online.
The Open Data Advantage: Unlocking New Business Models
Beyond compliance and customer experience, open data presents a powerful, often overlooked opportunity: the creation of entirely new business models.
Aggregated and anonymised open banking data can power financial wellness apps, ESG scoring, SME financing platforms, and even cross-industry partnerships in retail, insurance, and mobility. Forward-thinking banks and fintechs are already exploring how to monetise open data ethically and securely, without compromising privacy.
The Way Forward: Strategic Action for 2025 and Beyond for Open Banking
To succeed in the open banking economy of 2025, financial institutions must:
Treat compliance as a catalyst for innovation, not an obstacle.
Rebuild trust through transparency, security, and education.
Personalise offerings using open data, AI, and behavioural insights.
Expand internationally with a compliance-first mindset.
Leverage open data to create new products, services, and partnerships.
At Contextual Solutions, we help banks, fintechs, and payment providers navigate this complex landscape, offering tailored strategy, market entry support, and regulatory guidance to transform open banking challenges into growth opportunities.
📩 Get in touch to learn how we can help you define specific use cases, create product roadmaps, or conduct competitive analyses or user research that will clarify your open banking roadmap and strategy.
