A New Order in Finance: How Open Finance is Reshaping Fintech Business Models

As many as 77% of corporate banks believe the greatest earning potential lies in offering third-party products and services. The traditional, closed model of banking is, by all accounts, becoming obsolete. In its place, open financial ecosystems are emerging, where the key to success is collaboration and integration, not trying to build everything alone.

The Current State of Finance

Few would now dispute that the financial sector is undergoing a profound change. The old model, where banks controlled nearly everything, is giving way to open and decentralised ecosystems. This represents more than just a technological evolution; it is a fundamental change of strategic direction, driven by a combination of new regulations, innovation, and, above all, a complete shift in customer expectations.

Once built on customer inertia and the high costs of switching, loyalty is now simply disappearing. An analysis from McKinsey shows that as many as one in five customers are now willing to change banks each year, proving that attachment to a single institution is no longer a given. Consumer dissatisfaction is just as apparent. A 2025 report from Capgemini reveals that only 26% of customers are satisfied with their bank cards, creating a significant “satisfaction deficit” that allows new players to grow quickly.

At the centre of this shift is Open Finance. An extension of Open Banking, the concept is forcing financial institutions to change their thinking from a product-first approach to one that prioritises the customer. Open Finance is not an end in itself; analysts at Celent aptly describe it as a collection of “data ingredients” for building new business models and generating revenue. In practice, Open Finance gives dissatisfied customers simple tools to switch service providers far more easily than ever before, turning their discontent into a real force for market change.

A Shift in the Market’s Power Balance

The old model: a customer in a “walled garden”

At its core, traditional banking operated on a vertical model. This meant a single institution controlled the entire process, from product creation to customer service. In such a system, the customer was largely dependent on their bank’s offerings. With high barriers to entry and significant switching costs, the market had little competition, and loyalty often stemmed from habit rather than genuine satisfaction.

The new model: the customer at the centre

At the heart of the current transformation is the customer, now placed at the centre of the financial ecosystem to connect with many specialised providers. This new model operates based on two key mechanisms:

De-coupling (separation): This process breaks down complex financial products into their simple components. A traditional current account, for instance, is now being split into independent services. For customers, this means the freedom to choose the best provider for each service separately—a payment account here, a better loan there.

Re-bundling (re-aggregation): This involves combining these separated services from different companies into a new, often highly personalised, offer. Most modern business models in the fintech sector, from PFM apps to Embedded Finance platforms, are based on this mechanism.

Embedded Finance is a prime example of this trend, integrating financial services directly into non-financial processes, such as the BNPL “buy now, pay later” option in an online store. Just how significant is this change? According to an analysis by Boston Consulting Group, the embedded finance market was worth $185 billion in 2024. A report from IDC also indicates that embedded and open finance are major drivers of technology investment.

The result is an inversion of the traditional value chain. In the old model, profits came from controlling production. What becomes most valuable in the new, open ecosystem is the direct relationship with the customer and control over the point where services are aggregated. Traditional banks risk becoming mere infrastructure providers—”dumb pipes”—while fintechs, marketplaces, and tech giants capture the profitable layer of customer contact.

Open Finance as a Driver of Change

Definition and evolution

As a natural and significant evolution of Open Banking, Open Finance goes much further than its predecessor. While Open Banking focused mainly on payment account data under regulations like PSD2, Open Finance covers a far broader list of products, from savings and investments to insurance and pensions. This is a global movement; as Celent reports, similar regulations are now being implemented or developed in over 60 countries.

A strategic requirement, not an IT project

Open Finance shouldn’t be seen as just another IT project; it is a fundamental change in business strategy. The most forward-thinking institutions treat its data as key “ingredients” for increasing efficiency, developing new products, and creating entirely new business models. The pace at which this concept is being adopted is accelerating rapidly. Data from Celent’s annual study shows the percentage of banks using these mechanisms for product development doubled from 12% in 2023 to 24% in 2024, with forecasts predicting further growth.

Practical business applications

By standardising the exchange of data, Open Finance creates fertile ground for many innovative applications:

• Financial marketplaces: These platforms use APIs to aggregate offers from many institutions in real time, presenting them to customers in an easy-to-compare format.
• PFM 2.0 apps: With customer consent, these tools access data from various sources to offer a holistic view of a user’s financial situation and automate budgeting.
• Improved credit scoring: Instead of relying only on historical data, lenders can use real-time transaction data (cash flow underwriting) for a more accurate picture of a client’s finances. As Celent notes, this improves risk assessment and expands access to credit.

In this way, Open Finance allows banks to finally see the full picture. It replaces the incomplete “360-degree view” with a complete perspective that includes a customer’s activities with competitors. For any institution, access to this strategic information is the key to creating better offers and effectively gaining market share.

The Bancovo Example

The marketplace business model perfectly illustrates the new, ecosystem-based approach to finance, and prime example of Open Finance is Bancovo. The platform does not create its own products, but manages a two-side market that connects consumers with loan offers from many banks. Its primary task is to lower transaction costs and eliminate information asymmetry for everyone involved.

Competitive advantage: the network effect

The marketplace model’s most powerful advantage is the network effect—a self-reinforcing mechanism where the platform’s value grows with each new participant. Every new consumer increases its attractiveness to lenders, while every new lender increases its value for all consumers. This dynamic creates a formidable barrier to entry for competitors.

A critical point is that this model fundamentally changes the nature of trust in financial services. In this arrangement, the main trusting relationship is built with the platform, not with the end provider. The platform’s brand and user experience (UX) become the main factors in the decision-making process.

Technology and its Impact on Business

API (Application Programming Interfaces)

Simply put, an API is a standardised way for different systems to communicate and exchange data. Within Open Finance, an API acts as a controlled “gateway” to a bank’s data and services. While APIs are the lifeblood of the open ecosystem, security analyses show they are also a prime target for attacks. The main business benefit is a radical reduction in the cost and time of integration, replacing months-long projects with a “plug-and-play” model.

Microservices architecture

With this approach, instead of one huge application, a business creates a collection of small, independent programs. Each is responsible for a single function, like payments, and can be developed independently. According to research from Forrester, companies that make this switch can see up to 50% lower latency and 60% faster transaction processing. These technical improvements translate into two key advantages:

• Agility: Independent teams can work on different services in parallel, allowing the organisation to react much faster to market changes.
• Time-to-Market: Introducing a new feature is drastically faster because a change in one element does not require rebuilding the entire application.

A company’s technological architecture is a physical reflection of its strategy. An organisation based on outdated systems is, by definition, condemned to slow operation. Investing in modern architecture is about building the capabilities needed to operate in an open ecosystem. As McKinsey points out, outdated technology is one of the main barriers holding back digital transformation in banking.

Challenges and Barriers

Implementing the Open Finance model, despite its great potential, means facing several significant challenges.

Data security and cyber threats are a serious issue. The interconnections within the ecosystem greatly increase the attack surface, with every partner and API becoming a potential attack vector. This threat is compounded by generative AI, which, as IDC warns, can be used to create sophisticated fraud.

Another challenge is building customer trust. The model requires consumers to entrust sensitive financial data to new intermediaries. Building and maintaining that trust is key. It requires creating proactive trust frameworks that provide transparency and solid privacy protection.

Regulatory complexity also poses a problem. Companies operating internationally must work through a maze of different regulations, like GDPR in Europe. Ensuring compliance generates significant costs and requires continuous monitoring.

Finally, a major practical barrier is the low quality of some APIs. Problems like instability or poor documentation from certain institutions lead to unreliable partner services, which directly translates into negative customer experiences and undermines the value of the entire model.

Summary

The shift to the Open Finance model is a strategic decision, not merely a technological one. In this new order, the advantage is gained not by individual institutions but by platforms, such as marketplaces, that effectively connect services and build value through network effects. The foundation of this change, however, is a modern and agile IT architecture. It is evolving from a simple technical back-end into a key condition for innovation and the ability to compete.