Open finance at a legislative crossroads: Getting it right from the start.
The open finance industry is at a legislative crossroads, as the EU Commission is developing its first complete set of rules for its governance. These rules will determine how this industry will scale in the future. We have been actively engaging in sharing our experience with policymakers and other stakeholders. Here is what we’ve learned.
Open finance is the next great frontier of the finance industry as it can give unprecedented power to consumers and enable new business growth. Scaling up open finance will see an enhanced emphasis on customer experience, privacy and data flows, across Europe. In coming up with the first comprehensive framework governing this industry, EU policymakers are tasked with the responsibility of getting it right for the consumers. Therefore, it is essential that all stakeholders are heard and represented. In bolstering this mission, Insurely recently engaged in an event in the European Parliament, bringing together key industry players and policymakers alike. To summarize the current discourse, we can look at the most popular key demands shared by a broad consensus.
In our discussion with key stakeholders we have identified three common factors that are required to unlock the full power of open finance:
- We need a clear framework that unleashes innovation.
The single greatest benefit of open finance is the ability to bring new products to the market. In short, as open insurance scales, the market gets more diverse. This resulting competition is empowering for the consumer. Innovation is the key factor supporting the roll-out of such new services. EU policymakers should establish a clear forward-looking framework that supports innovation and brings about rules that are able to support new business.
- We need clear guardrails that protect consumers.
Customer experience is at the core of open finance. Innovation-based growth of the open finance industry empowers consumers as they are able to make big decisions for themselves. by. Information is key in finance, and by democratising information, we all win. We advocate legislative ambition that in addition to unleashing innovation, also protects the consumers. Clear guardrails mean concrete legislation that is future proof by accommodating for a range of industry-specific details. Legislation that empowers both consumers and business is flexible, innovative, and progressive.
- We need clear regulation on what data to share.
Data sharing is essential to enable the open finance industry. At the same time, the way in which consumers are willing to share their data is safe, secure and clear-minded. It’s about creating incentives. The legislation and the businesses must be able to create a safe landscape for consumers to share their data, in order to grow the open finance industry.
The above principles are a reflection of recent discussions between key stakeholders, necessary in the early stages of development of open finance. We will continue to engage proactively with all stakeholders to ensure that all relevant voices are heard in the fast paced and exciting development of the general framework for open finance – one that would both empower the consumers and pave the way for innovation.