Open finance – a retail perspective: Creating and capturing value while balancing the dilemma of data protection

Abstract: The banking and financial services industry is experiencing a significant transformation driven by factors such as regulatory changes, customer demands, and the growing focus on data. This evolution has given rise to the concept of open finance, an extension of open banking that encompasses various financial sectors. Open finance aims to promote data sharing and access across the industry, with the goal of empowering consumers, fostering competition, and creating new opportunities for businesses. However, navigating this changing landscape poses challenges and requires strategic considerations, particularly for retail companies. This thesis explores the key trends and drivers shaping the evolution of open finance, its impact on market structures and industry dynamics, and how retail companies can strategically position themselves to create value within an open finance ecosystem. Additionally, it identifies the risks and challenges that retail companies may face and provides insights on managing these risks effectively. Lastly, the project delves into the tension between the benefits of data sharing and the need to build consumer trust in data handling practices. By addressing these research questions, this study aims to contribute to a comprehensive understanding of open finance and its implications for retail companies and consumer trust in the evolving financial ecosystem. Answering the research questions, the drivers of open finance were identified to be regulation, data, technology, and business. The market dynamic can be best described as highly competitive, revolving around business ecosystems. In this new business dynamic, retail companies should position themselves as orchestrators of ecosystems, taking on the role of in-house distributor. Numerous risks and challenges were identified, as well as appropriate measures to take and how it affects the rationale behind their ecosystem role. Lastly, the research highlights the importance of transparency, honesty, and educational efforts from businesses. However, this needs to be combined with strong data protection measures to foster consumer trust and ensure the successful implementation of open finance initiatives.