Industry and regulators must drive forward open finance together to meet the UK’s growth mission

The FCA has identified the adoption of open finance in the UK as a key priority for the next five years.

It would be fair to say that the operating environment for UK regulators has evolved rapidly over the past 12 months.

The Labour government has given them an explicit mandate to make fostering economic growth part of their briefs. As the body responsible for overseeing the UK’s world-leading financial services industry and fast-growing fintech ecosystem, the Financial Conduct Authority (FCA) may be feeling the weight of those added responsibilities more keenly than most.

It was especially timely, therefore, that to kick off UK Fintech Week 2025, my organisation – the Centre for Finance, Innovation and Technology (CFIT) – had the pleasure of interviewing Nikhil Rathi, chief executive of the FCA, on stage at the Department for Business and Trade’s Global Fintech Forum on Monday 28 April to get an update on their progress.

The organisation wasted no time in setting out how it intends to rise to this challenge. In an open letter to the Prime Minister early this year, Rathi outlined a high-level approach for aligning financial regulations with the UK’s growth agenda. That was swiftly followed in March by the release of the FCA’s five-year strategy through to 2030, detailing how the regulator will set the balance between risk and enabling growth.

There was much here for the financial services sector, and UK plc as a whole, to get excited about. That is in large part because the areas of focus identified by Rathi and the FCA closely align with the priority technologies and innovative matters that industry has already been driving forward in recent years.

For example, Rathi’s open letter to the PM called for government action in the field of digital verification. Just weeks later, an innovation coalition led by CFIT published its findings and recommended next steps on how Digital Company ID can help fight economic crime.

The open letter also recognised that SME lending should be prioritised as a use case for the kind of smart data schemes that will be created by the Data (Use and Access) Bill, which is currently progressing through parliament. That builds on the work last year of the CFIT-chaired SME finance taskforce, as well as dovetailing with our upcoming strategic partnership with Mastercard, Lloyds and HSBC to help SMEs access finance.

Meanwhile, the FCA’s strategy identified the adoption of open finance – the extension of open banking-style secure data-sharing across all areas of financial services – as a key priority for the next five years. Open finance had been the subject of CFIT’s inaugural industry-wide coalition. And, with its potential to transform how consumers interact with financial services, it was a key plank of Rathi’s fireside chat.

The FCA is working at pace to release a roadmap for the roll-out of open finance within 12 months. It aims to have the regulatory foundations for the first scheme in place by the end of 2027. Those timelines recognise the transformative potential of open finance to unlock a wider smart data revolution – but also the importance of ensuring strong data protections and earning consumer trust.

Without the necessary safeguards and encouraging adoption by consumers, people simply will not make use of their financial data to receive more personalised financial service products – even if the infrastructure and regulatory framework exists to do so.

Another area of focus for the FCA is how it works with other regulators and government departments on this issue. Because open finance extends into pensions, insurance and investments, some of the siloes in which financial data sits will be overseen by bodies other than the FCA. A coherent, cross-sector and intra-governmental approach is crucial if we are to jump beyond the comparatively narrow scope of open banking. While that has been an undoubted success, becoming the model for UK smart data schemes to emulate, our ambitions with open finance are to enable secure, seamless sharing of all the data that comprises the financial lives of businesses and individuals.

This kind of collaboration between regulators and government departments must also be replicated across the private sector and academia. Importantly, Rathi made it clear that it applies internationally as well. While the UK was an early fintech leader with innovations such as open banking, nations such as Singapore, India and Saudi Arabia have all taken the lead in different areas. We must continue to collaborate with other key fintech markets – while recognising that they may leave us behind unless we continue to move fast.

In that context, a positive takeaway from last week’s fireside chat was the clear statement of intent for the FCA to dial up its embrace of innovation and approach this space humbly to have smarter, more efficient regulation that provides speed and clarity and meets the expectations of industry.

The regulator earned its forward-thinking, progressive reputation by pioneering sandboxes and working closely with start-ups and the fintech ecosystem to understand how existing rules could be aligned with emerging technologies. Now the next wave of rapid change in financial services will be driven by these technologies, such as AI and Distributed Ledger Technology (DLT).

The FCA has been clear in its response to the government’s pro-growth mandate: the time to act is now, and it sees no contradiction in its work to enable innovation while ensuring consumer trust. Open finance can serve as the ultimate proof-point of this conviction.

Nicole Sandler, Head of Corporate and Regulatory Affairs, Centre for Finance, Innovation and Technology (CFIT)

First published on Fintech Futures on 6 May 2025