Key Considerations for Open Finance November 2024 CGAP Rights and Permissions 1818 H Street, NW, MSN F3K-306 This work is available under the Creative Commons Washington, DC 20433 Attribution 4.0 International Public License (https:// Website: www.cgap.org creativecommons.org/licenses/by/4.0/). Under the Email: cgap@worldbank.org Creative Commons Attribution license, you are free Telephone: +1 202 473 9594 to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: © CGAP/World Bank, 2024. Attribution—Cite the work as follows: CGAP, BIS, IMF, UNSGSA, and World Bank. 2024. “Key Considerations for Open Finance.” Washington, D.C.: CGAP. https:// www.cgap.org/research/key-considerations-for-open- finance Translations—If you create a translation of this work, add the following disclaimer along with the attribution: This translation was not created by CGAP/World Bank and should not be considered an official translation. CGAP/World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by CGAP/World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by CGAP/World Bank. All queries on rights and licenses should be addressed to CGAP Publications, 1818 H Street, NW, MSN F3K-306, Washington, D.C. 20433 USA; e-mail: cgap@worldbank.org Key Considerations for Open Finance  Acknowledgments Maria Fernandez Vidal (CGAP) is the lead author of Feven Getachew Asfaw (CGAP), Heather Bourbeau this publication. Maria Teresa Chimienti (World Bank), (CGAP), Simrin Makhija (CGAP), and Jahda Corrinne Ho (BIS), Sheirin Iravantchi (World Bank), Swanborough (CGAP) contributed to communications, Harish Natarajan (World Bank), Fredesvinda Montes copy editing, and design. (World Bank), Cristina Martinez (CGAP), Jermy Prenio (BIS), Friederike Ruehman (World Bank), Arisha Salman The team would like to thank Pablo Saavedra (World (CGAP), Sophie Sirtaine (CGAP), David Symington Bank) and peer reviewers Arturo Franco (World Bank), (UNSGSA), Peter McConaghy (UNSGSA), and Helena Leurent (Consumers International), Adel Meer Xavier Faz (CGAP) contributed significantly to (IFC), Sheila Okiro (African Development Bank), and this publication. Augusto de la Torre (Columbia University) for their input. We would also like to thank Parma Bains (IMF), This effort was guided by a Steering Committee led Eric Duflos (CGAP), Jon Frost (BIS), and Kateryna by Sophie Sirtaine (CGAP) and composed of Xavier Zhabska (IMF) for their comments. Faz (CGAP), Maria Fernandez Vidal (CGAP), Gaston Gelos (BIS), Dirk Grolleman (IMF), Corrinne Ho (BIS), Finally, the team would like to thank H.M. Queen Máxima Peter McConaghy (UNSGSA), Marina Moretti (IMF), of the Netherlands for championing this initiative and Harish Natarajan (World Bank), Jean Pesme (World World Bank Group President Ajay Banga, BIS General Bank), Jermy Prenio (BIS). and David Symington Manager Agustin Carstens, and IMF Managing Director (UNSGSA). Kristalina Georgieva for their support. Key Considerations for Open Finance  iii Acronyms 2FA two-factor authentication AML anti-money laundering APIs application programming interface CFT countering the financing of terrorism G2P government-to-person MFA multi-factor authentication M&E monitoring and evaluation MSMEs micro, small, and medium enterprises PFM personal financial management TPP third-party provider Key Considerations for Open Finance  iv Executive Summary A GROWING NUMBER OF COUNTRIES important to note that the design choices made under are considering, designing, or implementing one element will impact other elements, and authorities open finance frameworks. Open finance should consider the interplay between different frameworks have the potential to enhance customer choices as well as the possible trade-offs between empowerment and experience, impact competition different policy objectives. in the financial sector, spur data-driven innovation, and improve financial inclusion. Yet open finance can 1. Objectives – Define the desirable policy also pose new or enhanced risks, especially as more objectives and how open finance will data is exchanged between financial sector providers. contribute to them. Before starting design and Therefore, public authorities have a critical role to play implementation of an open finance framework, in carefully designing their open finance framework and it is important to identify which market barriers ensuring adequate safeguards. open finance aims to address, define which policy objectives open finance seeks, outline how open While considerable progress has been made to finance will help achieve these, and assess whether increase access to financial accounts, there are still the key enabling elements are in place. significant opportunities to expand the use and 2. Process leadership – Recognize the key role benefits of financial services for those who already of public authorities as well as the need for have accounts. Through open finance, providers collaboration. Public authorities have a crucial role can leverage customer data to expand and improve to play in the design and implementation of open their services, offering personalized savings, credit, finance, and both collaboration across different insurance, or investment products. public authorities and private-public collaboration are needed. As the development and adoption of open finance 3. Governance – Set up effective, transparent, and becomes a central element of digital financial inclusive governance arrangements. Governance ecosystems in a growing number of countries, there arrangements should support the objectives is a unique opportunity to design open finance sought through open finance, ensure adequate frameworks in a way that supports responsible financial representation of all relevant stakeholders, and help inclusion and benefits all parties involved, especially organize and support the ecosystem’s operations. those traditionally excluded and underserved. This document aims to provide high-level considerations for 4. Regulation – Implement risk-based and financial sector authorities implementing or looking to proportionate regulation that clearly determines implement or improve open finance frameworks. The the rules for customer-permissioned data considerations, listed below, are structured around 10 access. The regulatory framework for open finance key elements of an effective open finance framework. should determine the rules and conditions for While these are presented as distinct elements, it is (permissioned) access to customer data, including Key Considerations for Open Finance  1 ensuring all participants are subject to regulation. If important in order to support customer adoption data sharing is mandated, the regulatory framework and enhance consumer protection. Fostering needs to clarify what data needs to be made consumers’ financial capabilities and awareness accessible and by whom. Guidance may be needed is particularly important for reaching traditionally to clarify how relevant existing laws and regulations excluded and underserved segments. should be applied in the context of open finance. 8. Participation – Enable broad participation of 5. Oversight and supervision – Guarantee provision financial services providers. Broad participation of the necessary enforcement powers and of financial services providers is needed to ensure resources for oversight of the ecosystem, as well that as many customers as possible can adopt as proportionate supervision of all participants. and benefit from open finance. Reciprocity can Authorities should have the necessary offer an incentive to participate. Authorities may enforcement powers, mandate, capacity, and also consider mandating participation of large resources to articulate and implement an oversight data holders. policy to adequately monitor the open finance 9. Technical infrastructure and architecture – framework and to subject all relevant entities to Encourage the use of standardized application proportionate and risk-based supervision. programming interfaces (APIs) and a common 6. Consumer protection and data protection – architecture. APIs should be standardized Ensure a robust consumer protection and data to support broad participation, allow for protection framework is in place. A robust interoperability, reduce costs, and ensure data consumer protection, data protection, and security standards are met. Centralized and privacy framework needs to be in place or set up decentralized architectures as part of the open finance implementation to can be considered, depending on priorities and build consumer trust, generate positive customer market conditions. experiences and outcomes, and foster adoption 10. Pricing – Monitor and influence pricing to while minimizing potential harm. Obtaining valid support policy objectives. Pricing can impact consent from data subjects before data is shared, development and adoption of open finance including effectively authenticating the customer, products and services. The impact on policy is a defining element of open finance. objectives should be considered. Establishing 7. Consumer information and awareness – Facilitate principles for compensation can reduce complexity consumers’ awareness and understanding of and support fairness. Certain circumstances open finance opportunities and risks. Ensuring or policy objectives may warrant delaying cost the public is well-informed about open finance is recovery or justify free access for data users. Key Considerations for Open Finance  2 Introduction O PEN FINANCE1 IS A FINANCIAL by enabling more equal access to data for different innovation that facilitates customer- providers, breaking data silos, reducing information permissioned access to and use of customer asymmetries, and making it easier for financial services data held by financial institutions in order to provide users to compare offers and choose providers. Open new and enhanced services and develop innovative finance can empower customers, giving them greater business models. Open finance has increasingly visibility and control over their financial data by become a topic of interest as countries have realized enabling them to manage consent to use their data. its value and have focused on developing sector- Moreover, when designed in a user-friendly way, the wide2 data-sharing frameworks. As a result, a growing new products and services powered by open finance number of countries are considering, committing to, can simplify the use of financial services, making them or implementing an open finance framework. While more accessible and better tailored to customer needs. higher-income countries were early implementers of It is important to note that in order to fully reap the data-sharing frameworks, many countries at all income benefits of open finance, the risks that come with it will levels and from all regions are now in the process of need to be adequately managed. For example, open implementing open finance. finance can create opportunities for small players, but it may also enable large players from other sectors to The key policy objectives of countries that have participate. Thus, it is important to monitor the impact implemented open finance frameworks include on competition. spurring innovation, increasing competition, enhancing customer empowerment and experience, and Open finance should be seen as part of the overall improving financial inclusion. Open finance has the digital finance development journey of a jurisdiction, potential to promote innovation by enabling new following key reforms and the development of key products, new services, and new business models. financial infrastructure. Jurisdictions ready for open Open finance can facilitate data-driven product finance typically have a robust financial services innovation by increasing the customer data available provider landscape, with new providers of digital to a broader group of financial services providers financial services (e.g., mobile money providers, and reducing the cost of accessing that data. It can fintechs) as well as banks and other incumbent potentially support competition in the financial sector financial services providers with robust digital 1 Open banking refers to the sharing of customer-permissioned account data by banks with other banks or third parties for the purpose of building and offering applications and services. Open finance goes beyond open banking to cover a broader suite of financial products, such as investments, insurance, and pensions. The main services facilitated through open finance are account information services and payment initiation services. 2 Sector-wide or market-wide arrangements refer to the coordinated frameworks, agreements, and structures established across the financial sector to facilitate the secure, efficient, and standardized sharing of financial data. Key Considerations for Open Finance  3 capabilities. Building upon this enabling environment, access to formal credit remains a key challenge for open finance has the potential to support financial many low-income customers and small businesses. inclusion and growth of the financial sector, thereby contributing to expanding the breadth, 3 depth,4 Open finance may also improve personal (or business) and utility5 of financial services. In the last decade, financial management (PFM). Use cases have emerged considerable progress has been made to increase that look to improve the user experience, consolidate access to financial accounts. However, there are financial information, and offer recommendations. still significant opportunities to expand the use Increased awareness of one’s financial situation through and benefits of financial services for those who account information services can help reduce costs and already have accounts by spurring digital payments inefficiencies from overdrafts and idle balances while and supporting access to and responsible use also facilitating financial planning and budgeting. This, of credit and other relevant financial services. too, may contribute to increasing the financial health Open finance can support these opportunities by of customers. In the case of MSMEs, consolidated enabling providers to offer personalized savings, information can help in better cash flow and financial credit, insurance, or investment products. These management. In some jurisdictions, open finance developments hold promise to support financial constructs have been extended to include government health outcomes. They are also relevant to addressing records (e.g., value added tax and e-invoices), which are the gender gap in finance.6 particularly relevant for MSME financing. Open finance allows the use of transaction data for Third-party payment initiation, enabled by open credit decisions, overcoming common limitations finance, can create new propositions that increase of traditional credit reporting systems that rely on the usage of transaction accounts, such as through formal credit history. Open finance also goes beyond seamless integration of payment services into data portability, which provides customers access e-commerce transactions and social interactions that to their own data and/or the possibility to move their improve the user experience. Combined with fast relationship from one provider to another, but it does payments, payment initiation can offer a lower-cost not always allow for direct transfer between providers, solution for electronic payment acceptance for small which would ensure the integrity of the data. By businesses and better user experiences for payers. having more information about customers’ financial lives and the operations of micro, small, and medium While the links to the depth and utility of financial enterprises (MSMEs), providers are able to better services are stronger, open finance has the potential assess income/cashflow and credit risk and expand not only to bring benefits to those with existing access credit in line with their risk appetite. Some providers to a transaction account but also to open up new also report reduced loan processing costs due to pathways to account ownership (i.e., increase the easier and more reliable access to financial data. This breadth of financial inclusion). The development of new is promising for financial inclusion because limited services can make account ownership more attractive, 3 Breadth refers to the number of customers who have access to and use a financial account. 4 Depth refers to the extent to which customers have access to an expanded suite of financial products and services. 5 Utility refers to the practical benefits and positive outcomes of financial products and services. 6 Women typically face greater financial exclusion than men. While the gender gap in account ownership in developing economies narrowed by 3 percentage points between 2017 and 2021 (from 9 percentage points to 6 percentage points), there are significant differences across regions, with some countries showing worsening gender gaps. Barriers persist and include legal restrictions and disparities based on income, job status, education, urban-rural, gender norms, and other aspects. Women and women-owned firms still lag their male counterparts in accessing finance globally. Key Considerations for Open Finance  4 and the new providers entering the financial sector adoption by underserved customers, the inclusion gap can make more efforts to reach those traditionally could be widened instead of narrowed. excluded when looking to grow their customer base. While account ownership is a prerequisite to benefit As the development and adoption of open finance from open finance services, open finance can be becomes a priority and a central element in digital used to scale up application programming interface financial ecosystems, there is a unique opportunity (API)-based 7 collaborative approaches and business to design open finance frameworks in a way that models to serve low-income people. supports financial inclusion and benefits all parties involved, especially customer segments that have While the early evidence shows potential for positive been traditionally excluded and underserved. impacts, open finance can also pose new or enhanced Open finance is complex, requiring a collective risks. Increased data sharing and use heighten the commitment, coordination, and alignment in its design, potential for fraud, data security, protection, and implementation, and operation. Sound governance and privacy risks. While the introduction of new financial oversight arrangements are critical to ensuring that services providers and new business models can have the desired policy objectives are met and the potential advantages in terms of innovation and competition, risks mitigated. Although the evidence base from it can also impose new regulatory and supervisory open finance implementations is still limited, countries demands. While the entrance of new players can considering, designing, or implementing open finance support competition, ushering in dominant players can benefit from access to global experience and good from other sectors (e.g., large technology companies practices. Countries can leverage available experience or “Big Tech”) and enabling them to gain access to to address key questions early on, while open finance customer data held by financial institutions without frameworks are being designed, since taking corrective providing for reciprocity may hinder competition. measures ex-post could prove more challenging Moreover, in the absence of key supporting elements, and costly. These considerations bring together such as broad access to transaction accounts and available knowledge and insight on open finance to widespread use of digital payments, there is a risk that assist countries exploring, designing, developing, or those traditionally excluded will be left further behind. implementing open finance. If open finance is not designed in a way that fosters 7 APIs encompass a set of encouraged or required rules and specifications for software programs to communicate with each other, forming an interface between different programs to facilitate their interaction. Key Considerations for Open Finance  5 Approach T HIS WORK AIMS TO PROVIDE open banking. While this document does not address the high-level considerations for financial implications of expanding open finance to other sectors sector authorities implementing or looking (i.e., open data), many of the same considerations will to implement open finance. While design and continue to apply as data sharing ecosystems expand. implementation should consider the circumstances Authorities are encouraged to consider the implications of each market and be tailored to the defined policy for an eventual open data ecosystem that includes objectives, the considerations in this document data beyond the financial sector when designing and are intended to be relevant to most open finance implementing open finance – while recognizing that initiatives. To that end, this document articulates participants and stakeholders would change significantly. 10 key elements of open finance ecosystem design. It highlights connections between different design “Sector-wide arrangements” refers to coordinated and implementation choices and potentially desired frameworks, agreements, and structures established outcomes. When applicable, the advantages and across the financial sector. These arrangements are disadvantages of alternative options are provided. The put in place to facilitate the secure, efficient, and considerations are based on emerging good practices standardized sharing of financial data. This document and existing standards in related areas. focuses on sector-wide frameworks because their design and implementation involve choices and pose This document focuses on: (i) open finance (instead specific challenges that authorities need to address. of open banking or open data8); (ii) sector-wide These frameworks also have more significant potential arrangements (instead of individual initiatives9 or for impact than bilateral or individual initiatives, as bilateral arrangements); and (iii) country-level data they affect the financial sector as a whole instead of sharing (instead of cross-border). only a limited number of players and their customers. Regardless of whether the open finance initiative is led The contours of data-sharing frameworks within the by the industry, led by the regulator, or a hybrid of both, financial sector and beyond are not always clear-cut. some level of financial sector-wide coordination is The available experience thus far shows that a phased needed. Uncoordinated initiatives do not constitute an approach to gradually expand scope has been the norm. open finance framework and are not considered part of Insofar as open banking is often a building block of open the open finance definition used in this document. finance, the considerations in the document also apply to 8 In the context of open finance, open data (sometimes referred to as smart data) refers to an extension of open finance that includes data outside the financial sector, for example, tax data, mobile phone data, or electricity data. The term “open data” can also be used with a different meaning outside the context of open finance. 9 Individual initiatives refer to companies accessing data similar to that which would be obtained through an open finance framework, for example, fintechs aggregating financial information through screen scraping of online banking data using a customer’s login credentials. Key Considerations for Open Finance  6 Finally, this document focuses on country-level10 These efforts could be particularly important for small frameworks because these need to be developed markets with limited opportunities to scale up on their before cross-border connections can be established. own, as well as for use cases on cross-border payments Thus far, there is limited experience with cross-border and trade. open finance initiatives. Applying the considerations highlighted in this document could contribute to The considerations are structured around 10 key more consistent approaches across jurisdictions, elements of an open finance framework (see Figure 1). which could facilitate future cross-border efforts. FIGURE 1. Key Elements of an Open Finance Framework zing for open finance Organi Process Leadership Objectives Governance g open finance Regulatin Oversight and Supervision Consumer Regulation Operational elements and Data Protection Consumer Information and Awareness Customer Consent Customer granted authentication Participation Data requested Technical Infrastructure and Architecture Data Data users provided Data holders Pricing 10 Or jurisdiction-level frameworks where relevant. Key Considerations for Open Finance  7 The elements start with objectives, as the policy objectives for an open finance framework in a given jurisdiction should guide design choices. Next, the document covers the process leadership and governance arrangements that will guide the design and implementation, followed by regulation, oversight and supervision, and consumer and data protection, which are essential supporting elements that need to be set up (if not already in place) or expanded and updated (where applicable) as part of an open finance framework. Consumer information and awareness are also highlighted, as these can impact open finance adoption and financial inclusion outcomes. Participation covers considerations related to the different players participating in the ecosystem, including data holders11 and data users.12 Lastly, the document addresses considerations around the infrastructure and architecture used in the technical design and implementation of open finance frameworks, followed by pricing considerations. While these are presented as distinct elements, it is important to note that the design choices made under one element will impact other elements. When designing the open finance framework, authorities should consider the interplay between different choices as well as the possible dynamic trade-offs between different policy objectives. Authorities implementing open finance can face multiple challenges, including conflicting priorities, limited resources and capabilities, lack of institutional readiness, gaps in regulation that may or may not be within their mandate (like data protection or competition regulation), cybersecurity concerns, and resistance from incumbents. The considerations presented in this document consider these and provide a framework which authorities can use to navigate these challenges. 11 Data holders are entities that hold or possess and manage customer financial data. These entities are responsible for sharing the data securely and responsibly with third parties, often through APIs. 12 Data users are entities that use customer financial data. These can be financial services providers or third-party providers. Key Considerations for Open Finance  8 Key Considerations Organizing for open finance can help further inform decisions and track progress. For example, countries could focus on objectives such as improved access or lowered costs of financing 1. OBJECTIVES — Define the desirable for MSMEs, reduced costs or reduced fraud in new policy objectives and how open finance will customer onboarding, or expanded insurance coverage contribute to them for certain risks. Measuring the impact of open finance Having clarity about what policy objectives open towards the identified policy objectives through a finance aims to achieve and how it will do so is an formal monitoring and evaluation (M&E) framework can essential first step when designing an effective open support decision-making and foster accountability. finance framework. Before starting open finance reforms, authorities should have a clear vision of the Realizing the potential impact of open finance policy objectives they expect to achieve through depends on having key enabling elements in the open finance, as well as a clear articulation of how financial ecosystem; assessing and ensuring their open finance can help achieve them. Open finance presence is also an essential initial step. If an enabling should not be considered the objective itself but a environment for financial inclusion is not in place, possible approach to addressing existing barriers the potential benefits of open finance may only in the market. Policy objectives should guide the reach a small number of customers, leaving the more framework’s design and help identify supporting vulnerable people behind. In addition to foundations elements that may need to be set up or strengthened related to technology and infrastructure, legal and as part of the implementation. Policymakers should regulatory frameworks, and private and public sector consider open finance as part of a broader financial commitments, enablers of access and usage of sector development and fintech strategy, and consider digital financial services are needed. These include the timing of investing in open finance vis-à-vis the transaction accounts that are easily accessible through impact of other initiatives while considering enablers digital and physical means by most adults; a safe and and prerequisites. Each country will need to define efficient payment system that is open to different its objectives based on its broader financial sector participant types and can accommodate increasing goals, its unique market conditions, and its priorities. transaction volumes; and efforts to create customer Some objectives that open finance could support awareness and enhance financial literacy. Some ways in include improvements in competition, innovation, which authorities can support an enabling environment customer empowerment, and customer experience, are through initiatives to open and generate use which can support financial inclusion and increase of transaction accounts by financially excluded the depth and utility of financial services. In addition customers (e.g., digitizing government-to-person [G2P] to the high-level objectives, having more granular payments, including public salaries, pensions, and priorities targeting specific challenges in the market social assistance); through regulation and licensing Key Considerations for Open Finance  9 that supports new player participation (e.g., fintech body or coordination agency or the designation of an and digital banking regulation); by supporting the existing one. development of a national payment system that offers a competitive alternative to cash (e.g., fast payment Collaboration across different public authorities initiatives); and/or by supporting the development is needed to establish a successful framework. of digital infrastructure to improve connectivity and Close coordination between different financial expand internet access. sector authorities (and potentially other authorities, such as data protection authorities) will be needed, especially when a broad range of non-banking financial 2. PROCESS LEADERSHIP — Recognize products is included. Clear mandates and smooth the key role of public authorities as well as coordination can also help ensure consistency and the need for collaboration fairness in regulatory and supervisory requirements Public authorities have a crucial role to play in the across different players, as well as support supervision design and implementation of open finance. While enforcement efforts and capacity-building through open finance can be industry-led, regulator-led, or knowledge sharing. Where two or more authorities are a hybrid of both, public authorities always have a involved and/or have responsibilities in the process, it key role to play. An arrangement driven solely by the can be helpful to identify the authority with the primary private sector may not serve core policy objectives nor responsibility to drive the process and coordinate fully contribute to all relevant goals. The involvement with other relevant authorities as appropriate. The of public authorities can be particularly important leading authority should determine and establish the if increased competition is an objective, as it will coordination and cooperation required to assist in be harder to meet this objective if providers with a regulatory design, implementation, and supervision dominant role in the market also have a dominant enforcement to achieve open finance objectives. role in the framework’s design. Public authorities can Coordination could be established through new or act as a catalyst for the open finance process by existing arrangements. determining the policy objectives, making them public and explicit, and supporting an enabling environment Public-private collaboration and open dialogue to achieve them. Depending on the institutional setup contribute to the implementation of a strong and the design of open finance, authorities may framework. An open consultation process that exercise leadership through a multidimensional role, involves all relevant players from the private sector including as regulators and overseers, in their capacity and nongovernmental organizations is desirable for as supervisors of open finance participants, in the designing a framework that reflects market realities context of open finance governance arrangements, and gets buy-in from all key stakeholders. An open and as infrastructure operators. Public authorities can dialogue with different types of private sector actors bridge potentially conflicting interests by establishing can offer the authorities valuable insights for designing clear processes, accountability, consultations, and an ecosystem that reaches the necessary participation collaboration mechanisms designed to achieve the and adoption to achieve its policy objectives. It framework’s objectives. It is also important that the is important for public authorities to be aware of public authorities tasked with leading this process have the setup and operation costs that the framework the mandate needed to address all relevant aspects could pose and the capacity constraints of different of implementation. Depending on the institutional stakeholders. Public-private dialogue is also important setup in each country, this can involve more than one to understand data holders’ concerns on data security authority and could include the creation of a new and privacy and to clearly establish liabilities, as a lack of clarity on potential liability over data users’ Key Considerations for Open Finance  10 activities can deter data holders from engaging with framework. The different types of financial services new players and slow down ecosystem growth. Scope, providers participating in open finance, including data reciprocity, and competition implications should also holders and data users, should be represented in the be considered (see Participation, below). governance model. Representation can be set up by creating groups or constituencies of providers with similar business models (e.g., large banks, medium/ 3. GOVERNANCE ARRANGEMENTS — small banks, cooperatives/credit unions, payments Set up effective, transparent, and inclusive providers, fintechs, etc.). It could also be beneficial to governance arrangements include an at-large representative and a representative for consumer rights. The governance arrangement An effective governance arrangement must be should be designed considering the specific objectives defined early in implementation – but may need the and priorities identified for open finance, including flexibility to evolve over time. Governance in open granular priorities such as use cases to foster. For finance refers to the arrangements that guide decision- example, when increased competition is an objective, making related to operational, functional, and fiduciary an adequate representation of smaller players will rules and standards for open finance. Governance be important to limit the decision-making power of arrangements and mechanisms are necessary to dominant players and provide a sufficient voice to address sector-wide decisions that involve multiple small entities. Public authorities play a critical role in actors and stakeholders who may have conflicting overseeing and potentially participating in governance interests, to define how decisions are made and to processes to ensure decisions are consistent with ensure the accountability of all participants. Governance policy objectives and to track progress against arrangements help make operational decisions these, and those authorities may choose to have efficiently, and set common sector-wide functional rules final approval or veto power over key issues. The and standards and support compliance with them. It can governance arrangements can also provide a forum be beneficial to design the governance arrangement and for public-private dialogue (as described in Process decide how it will be resourced early in implementation. Leadership, above), and participation in technical Open finance governance arrangements can be created discussions can offer authorities valuable insights into ad hoc or by leveraging existing fora or industry bodies. the incentives and challenges of different stakeholders The governance structure can include distinct levels and the implications for customers. of decision-making, working groups, and dedicated support resources. While a governance model will Governance arrangements can help organize and be needed at any stage, it is likely that the need for support the ecosystem operations, including by decision-making and defining clear rules for the orchestrating third-party provider (TPP)13 onboarding framework will evolve as the system matures. Therefore, through directories. Models whereby TPP identity and authorities may consider revising the initial governance access credentials checks are assessed individually arrangements as the ecosystem develops and allowing by data holders can create inefficiencies if each TPP for flexibility to adapt governance arrangements to needs to go through the same review process multiple better meet evolving needs. times. This can be particularly challenging for small players with limited resources as well as disincentivizing The governance arrangements should have for incumbents, who may be less inclined to participate adequate representation of all relevant stakeholders in the open finance ecosystem in view of the additional and support the objectives of the open finance 13 TPPs are organizations or individuals that use APIs to access a customer’s accounts, to provide account information services, and/or to initiate payments. Key Considerations for Open Finance  11 administrative burden and potential liability. These among different regulatory authorities may be needed inefficiencies can slow down the ecosystem’s growth in order to address the full scope of the regulatory and shift the balance of power towards incumbents framework. The legal framework should consider who may delay or deny access to new players, implications for competition and potential dynamic potentially affecting a country’s ability to fulfill policy trade-offs with other objectives. For example, the objectives, such as increased competition. Governance participation of Big Techs or telecom operators has arrangements can help set up more efficient shared different implications at different stages of open directories. Governance arrangements can also be finance maturity. Early on, it could be beneficial for leveraged to set up fraud information sharing and scam large-scale customer adoption and inclusion but could monitoring agreements between stakeholders. The result in the need for intervention should undue market involvement of a supporting body or an entity created power accrue. Regulation plays a key role in seeking a to organize and support the ecosystem under the sensible balance between competition and innovation, umbrella of open finance governance arrangements and in ensuring that competition thrives to create can reduce these risks. An appropriate regulatory and greater financial inclusion. oversight framework will need to be developed for such entities (see Oversight and Supervision, below). The regulatory framework for open finance should determine the scope, rules, and conditions for (permissioned) access to customer data and should Regulating open finance ensure these cover all participants. The framework should define: (i) the scope of participants (data 4. REGULATION — Implement risk- holders, data users, intermediaries); (ii) the types of based and proportionate regulation that accounts and types of data covered (e.g., payments, savings, loans, investments, and insurance data), clearly determines the rules for customer- as well as the requirements to access that data; (iii) permissioned data access new services based on access to data (e.g., account A sound regulatory framework that provides legal information, payment initiation services14) and new certainty to all participants is central to the success service providers (e.g., account information service of open finance. Open finance requires a sound providers and payment initiation service providers, legal basis consisting of laws, regulations, rules, and sometimes referred to as TPPs); (iv) modes and procedures that govern the rights and obligations of all standards of communication between participants; parties involved and create an enabling environment (v) how they obtain consumer consent; and (vi) other for innovation, facilitating new products, services, aspects, such as the framework’s governance model, providers, and business models. The regulatory if applicable. While the regulation will need to address framework also needs to address new or exacerbated all relevant areas, some details may need to evolve over risks by setting clear rules for operating within the open time (such as specific technical protocols) and thus finance ecosystem and for the relevant enforcement may be better addressed through other means, like mechanisms. It is important to address gaps and guidance or governance arrangements. In making these overlaps in the legal and regulatory framework so determinations, regulators should be guided by the that regulatory arbitrage is minimized and actors have policy objectives and the market context. certainty on the framework applied. Collaboration 14 Payment initiation services refers to account-to-account transactions in which applications can initiate payments directly from customer accounts via APIs. This type of service enables customers of widely used apps (such as social media and e-commerce apps) to also originate and receive payments more seamlessly through these apps. When combined with fast payment systems, payment initiation services enable the development of business models and new ways for originating and receiving payments. Key Considerations for Open Finance  12 If data sharing is mandated, the regulatory 5. OVERSIGHT AND SUPERVISION — framework needs to clarify the types of participants, Guarantee provision of the necessary accounts, and data that needs to be made accessible enforcement powers and resources for and provide adequate time for compliance. When oversight of the ecosystem, as well as data sharing is mandated, authorities must specify the types of entities that are mandated to participate and proportionate supervision of all participants may also make distinctions based on their size. A focus Authorities need to articulate an oversight policy for on larger players can be beneficial as these players tend the open finance framework. Oversight is concerned to hold the most significant volume of data and can be with monitoring open finance activities, assessing them better equipped to meet compliance requirements in against the policy objectives, and ensuring compliance a shorter timeframe than smaller data holders, as well with applicable laws and regulations, as well as inducing as due to their potential for larger systemic impact. change as needed. Appropriate oversight frameworks The authorities should also provide clear timelines that for open finance are needed to allow authorities to consider data holders’ capacities and allow for the monitor whether market and customer needs are met, development and testing of the necessary APIs. to assess risks, and to identify failures and address them, as well as to promote overall efficiency. As part In addition to new regulations, explicit guidance may of the oversight responsibilities, authorities also need be used to clarify how existing laws and regulations to oversee the setup and operation of the open finance should be applied in the context of open finance. governance arrangements. Open finance rests on laws, regulations, and standards that govern personal data and digital financial services, Authorities need to subject all open finance including data protection and privacy, consumer participants to proportionate and risk-based protection, customer authentication, operational supervision. Adequate supervision is required in risk, information security and cybersecurity (covered order to ensure individual participants’ compliance in more detail under Consumer Protection and Data with the applicable regulations. There is likely to be a Protection, below), anti-money laundering (AML), and need to supervise new players entering the financial countering the financing of terrorism (CFT). These need ecosystem, new services, and/or new business models. to be reviewed carefully.15 The open finance regulatory The cross-sectoral nature of open finance amplifies the framework should facilitate the standardization of need for effective cooperation arrangements between data transfers (covered in more detail under Technical authorities. In countries where no single authority has Infrastructure and Architecture, below). Guidance jurisdiction over the entire ecosystem, joint oversight may be needed on how existing regulations should be structures/committees may be appropriate. Given applied to new types of players (e.g., TPPs) or to new the likely participation of new and smaller players, products and services. Open finance may also expose supervision needs to be risk-based and proportionate. gaps in existing frameworks, which authorities may need to assess and address before implementing open finance and/or include in the reforms package. 15 The legal and regulatory framework applicable to AML/CFT should cover the entire ecosystem and its participants and should be adequately calibrated to the size, complexity, and type of risks posed by new entities and activities. Key Considerations for Open Finance  13 Authorities should have the necessary enforcement open finance also presents a safe and open way for powers, mandate, and resources to oversee the customers to allow third parties to access their data open finance framework and supervise all its with financial institutions. participants. Authorities responsible for the oversight and supervision of the open finance ecosystem A robust data protection and privacy framework should have the power to obtain information from all that provides sufficient safeguards to mitigate participants and induce change as needed to reach risks associated with increased personal data the stated objectives or reduce potential risks. Open transfers must be in place or set up as part of open finance will likely pose new demands on supervision finance implementation. Open finance entails a new resources to fulfill authorities’ responsibilities and the way of sharing personal data and a larger number related supervisory activities. New demands regarding and greater scope of players accessing and using authorities’ supervisory capacity in digital technology this data in the financial sector. If an open finance and analytics, consumer and data protection, and other framework is not supported by robust data protection related aspects of open finance should be assessed and privacy regulations, it may increase the risk of early and addressed adequately. data corruption, misuse, unauthorized access to data subjects’16 personal and financial information, or fraud. The fundamental data access rules prevailing in the 6. CONSUMER PROTECTION AND context of open finance will typically be set out in the DATA PROTECTION — Ensure a robust existing data protection framework, which may need to consumer and data protection framework is be updated to ensure consistency with open finance in place regulation. Additional regulatory responses may be needed if the applicable data protection and privacy A strong consumer protection framework is essential laws do not effectively provide sufficient safeguards to building consumer trust and generating positive to mitigate risks associated with the increased access customer experiences and outcomes that foster to consumer data and the new activities and services adoption while minimizing potential harm. Consumer in the context of open finance. While the existing protection provides legal protections against wrongly data protection framework will apply to open finance executed services and articulates accountability rules participants, there may be a need to provide additional for financial losses, fraud, and other potential abuses guidance on how to operationalize it to avoid legal or misconduct. Open finance-enabled services and uncertainty. Frameworks may also need to define activities should be subject to consumer protection how data protection principles (e.g., data quality, requirements equivalent to those that apply to other data minimization, accountability and transparency, financial services, covering information duties and data subjects’ rights, consent, legal basis for data rights, liability rules, complaints management, and processing, storage, third-party usage) are applied in other relevant areas. An effective recourse mechanism the context of open finance. In addition, data holders wherein customers can access a convenient, easy-to- should be able to easily verify the TPPs and their legal use complaints process for dispute resolution is rights and compliance with standards needed to necessary. Consumer protection rules should cover access customer data safely. This could be facilitated, all participants, including TPPs, that access and use for example, through certificates or by using a central customer data through open finance. As a response registry. Participating financial services providers’ to screen scraping and fostering competition, 16 A data subject is an individual or entity whose data is being collected, processed, and used by financial institutions and other entities. This includes data related to financial transactions, account details, investment information, and any other financial information that can be linked to the individual or entity. Key Considerations for Open Finance  14 use of privacy technologies could support individual in storage while protecting data from any alteration, privacy and strengthen trust and adoption of open unauthorized access, loss, or misuse. Open finance finance frameworks. participants should be required to adopt security policies, procedures, controls, and business continuity Permissioned data access requires informed consent arrangements consistent with those applicable to and an active opt-in (as well as the option to opt-out) digital financial services and commensurate with based on information that is specific, clear, concise, the risks entailed in the type(s) of service(s) and the and easily understandable to all customers, including information accessed or shared. To aid in making those with limited digital literacy. Obtaining valid operations more secure, data access should be consent for a specific purpose from data subjects provided via standardized APIs through which TTPs before data is shared is a defining element of an open exchange data with data holders. The API standard finance framework. In open finance, there is typically selected should meet up-to-date security standards a dynamic approach to customer consent, allowing and may need to be updated over time. customers to revoke data access at any time and review their consent history. An appropriate record of the Secure customer authentication, preferably based consents granted and the authentication of the data on multi-factor authentication (MFA)17 such as subject should be available as evidence of consent. two-factor authentication (2FA) – including digital While some jurisdictions have enacted rules for the IDs where feasible – is central to the integrity of an provision of consent, others have developed consent open finance ecosystem, but design choices may management mechanisms. A focus on having a smooth have implications for data protection and customer customer experience is important when designing experience. Robust customer authentication is critical processes to provide, manage, review, and revoke to reduce fraud and enhance consumer protection. consent, as well as when determining the level of detail 2FA and MFA are best practice standards for remote and duration of consent. While a one-time or short access to accounts and electronic transactions. consent duration may be sufficient for certain use cases, Regulators should ensure that authentication rules other use cases that require recurring access to personal used in open finance fall within the broad scope of data (as is the case with PFM tools), the customer 2FA/MFA, but they may need to apply proportionality experience will likely improve with longer consent to adapt these rules to open finance. Different duration windows that do not require frequent renewals. authentication methods present different trade- offs between security and ease of implementation. Data security measures should be in place for all The application of 2FA/MFA in the context of open ecosystem participants, and standardized APIs finance may, for instance, have implications for user should be the mechanism to share data. Data security experience (e.g., when the user must provide both measures that prevent unauthorized access to or factors manually). When the necessary digital ID use of data, including cybersecurity standards and systems are in place, digital ID-based authentication clear liabilities in the event of failures, should be in is both secure and simple for customers. However, place. Standards adopted should enable participants when feasible, multiple authentication methods can to identify, prevent, and respond to a cyber incident be made available to avoid exclusion, for example, of with the minimum friction possible to the systems, customers who may not have a digital ID. Different networks, and data subjects. Security measures should methods of authentication could also be considered also allow for the confidentiality of data in transit and for different actions, for example, differentiating 17 2FA or MFA is the process of verifying identity using at least two independent factors, such as a personal ID number, password, or security tokens. Key Considerations for Open Finance  15 one-time or first-time actions from recurring activities. Operational elements While 2FA/MFA are considered best practice today, it is important that the authentication methods required 7. CONSUMER INFORMATION AND evolve to keep up with technological advances. AWARENESS — Facilitate consumers’ awareness and understanding of open When designing data protection, privacy, and finance opportunities and risks security provisions, it is important to consider their Ensuring the public is well-informed about open impact on customer experience, competition, and finance, including about protection arrangements, is innovation. Authorities will need to strike a balance to important to support both consumer protection and ensure the open finance experience is user-friendly, customer adoption. Evidence from customer research convenient, and accessible – without any unnecessary suggests a strong correlation between people’s frictions for customers – while maintaining robust understanding of open finance and their willingness security and consumer protection standards that to share data and participate in the framework. Early protect customer information. It is especially important evidence from this research also suggests that to understand the impact of design choices on awareness of open finance and willingness to share customers with limited digital skills and those using data can be lower for underserved and traditionally lower-end devices. A standardized user experience excluded segments, specifically lower-income people across different players in the ecosystem can and women. Therefore, fostering consumer financial simplify engagement and help build customer trust. If capability and awareness among these segments increased competition is an objective, a risk-based and is particularly important, especially when financial proportional approach is important when implementing inclusion is an objective. The public must be informed compliance requirements so as not to unnecessarily about both opportunities and risks. It is important burden new and small players while ensuring necessary for customers to understand how their data is being protections for all customers. To support competition, shared and used, what protections exist to ensure this considerations should also be made on how smaller is done in a responsible manner, and what recourse players can be supported in meeting the necessary mechanisms are available. For example, ensuring that standards (e.g., for standardized APIs). Similarly, if customers understand how to withdraw access to their supporting innovation is an objective, the ability to use data once the intended purpose is met can incentivize open finance data for purposes such as new product adoption (as it lowers the perceived risk) and offer development, risk model improvement, or tailored protection against the potential risk of discriminatory product recommendations should be enabled. Privacy practices. Public campaigns to increase awareness and technologies and approaches like de-identification, improve understanding can help ensure the benefits encryption, synthetic data, and provisions on ethical reach underserved segments and avoid the risk of data mining can help ensure data protection while widening exclusion gaps. When possible, information allowing data to be used for product innovation. campaigns should incorporate consumer feedback. Both the public and private sectors have a role to play in educating customers, as early customer research shows most customers learn about open finance from their financial institution. It is important to note that customer experience may not be optimal early in the implementation process (e.g., due to API failures or limited available use cases). Therefore, it may be preferable to delay the launch of ambitious public Key Considerations for Open Finance  16 awareness campaigns to encourage adoption until supporting competition and innovation in the financial relevant use cases are well implemented and adequate services industry. Reciprocity can help increase the redress mechanisms are in place. amount of data available. The broader the scope of data included in the open finance framework, the more incentives for incumbents to participate (including via 8. PARTICIPATION — Enable broad reciprocity), as more data will be available beyond what participation of financial services providers they can access through existing mechanisms such as Broad participation of financial services providers, credit reporting systems. especially large data holders, is needed to ensure that as many customers as possible can benefit Open finance can unlock new business opportunities from open finance. It is important that those holding in terms of revenue opportunities from new services large financial data pools participate early in the and new customers, cost savings, streamlined implementation by adopting APIs that can enable processes, and improved risk assessments. This access to their customers’ data. Participation of large can help overcome the reluctance to make the initial players helps create the network effects18 needed investment. Having a clear articulation of the potential to encourage further participation in the ecosystem. benefits the framework could deliver for financial It also enables widespread customer adoption, as services providers can help achieve buy-in from the customers cannot opt to share their data with data private sector. Drawing upon available experience from users unless the provider holding their data participates live open finance frameworks, some of these benefits in the framework. Therefore, it is important for can include reduced costs for customer onboarding, authorities to ensure that incentives exist for large data reduced costs for credit assessment and loan holders to participate. Where needed (as demonstrated origination, growth of the lending portfolio, reduced by the assessed market dynamics, such as market losses due to improved risk assessments, growth of concentration and composition), authorities could the customer base, improvements in cross-selling consider mandating large data holder participation. effectiveness, and increased customer activity and Regardless of whether authorities deem mandating product use. participation necessary or not, close dialogue with the industry on the potential benefits and costs can When designing the implementation roadmap, the encourage a design that better fits market needs and impact of the scope of participation and the speed promotes participation. of implementation should be considered. While maximizing provider participation may be the end Establishing reciprocity19 for data users that are goal, requiring smaller players with limited capabilities also data holders can be a strong incentive to to join within a short time frame could have negative participate. While complete reciprocity may not be consequences in terms of data quality and, potentially, possible (different participants hold different types data security. A phased approach, wherein the scope and amounts of data that offer different potential value of data sources and types of participants are expanded to others), reciprocity ensures that those who want to gradually, may be easier to implement and oversee. The benefit from the ecosystem also contribute to it, thus existing capabilities of different types of players should 18 The network effect value grows in proportion to the number of possible connections between users. This means that returns to scale grow exponentially with new users and that there are only incentives to join if a significant number of users have joined. 19 Reciprocity refers to the characteristic of data sharing in an open finance ecosystem in which eligible entities participate both as data holders and as data users (i.e., contribute to and benefit from shared data) with the aim to create a more vibrant ecosystem and promote greater competition. It is important to note that data sharing should only happen with customer consent. Reciprocity entails the ability to access data held by those looking to use data, but it does not imply this data would be shared without specific customer consent. Key Considerations for Open Finance  17 be considered when defining the roadmap, as well as or other market factors. Regardless of who leads the the complexity of including a particular product or type development, it is important that there is collaboration of data. For example, bank account transaction data between the regulator and the industry. Regulators may may be easier to include early on than insurance data. require market participants to develop common data Transaction data is indeed likely to be more standardized and API standards through an existing industry body since banks are accustomed to communicating or ad hoc forum instead of directly defining these in transaction information in order to process transactions the open finance regulatory framework. They may also between parties. The potential for impact on policy keep the option to steer the process and/or approve objectives should also be considered when prioritizing API standards. This can help keep regulation neutral which data sources to include first. Given the significant to technical standard choices, which may need to role that smaller providers like microfinance institutions evolve quickly to stay up-to-date with technological and financial cooperatives can play in reaching evolutions. It is important for the regulator to ensure traditionally excluded segments, especially in low- and that the standards selected meet the necessary middle-income countries, it is important to consider how data security requirements so that information is to support the participation of these types of entities transmitted, processed, and managed safely and that when financial inclusion is a goal. the standards are reassessed periodically to ensure consistency with up-to-date technical standards. 9. TECHNICAL INFRASTRUCTURE While data storage is decentralized in open finance AND ARCHITECTURE — Encourage the frameworks, data transfers can be bilateral20 or use of standardized APIs and a common centralized.21 Each data transfer model has advantages architecture and disadvantages and should be assessed according to the scope of the ecosystem as well as the specific APIs should be standardized to support broad market conditions and objectives. A bilateral approach participation, allow for interoperability, reduce costs, could avoid a single point of failure and does not and ensure data security standards are met. Common require the setup and operation of a central hub. technical standards for APIs are critical for the smooth However, a bilateral architecture may be more complex functioning of open finance, particularly to avoid and expensive to implement and oversee. The market fragmentation and to decrease costs. Standardized power of large data holders is more likely to play a API specifications support improved competition role and potentially delay establishing connections by enabling interoperability and equal access for in a bilateral framework than in a centralized one. all participants. Standardization is also essential to Standardized APIs, as well as clear guidance from the realize the efficiencies promised by open finance regulator on roles and responsibilities of participants, and to lower the costs of operation and innovation. terms, and levels of service can help mitigate this by In addition to the API standards, it can be helpful to limiting the ability of large players to establish their define expectations in terms of service level. The own requirements to connect. A centralized approach development or adoption of API standards can be is likely to create lower costs and shorter timelines for led by the regulator or by the industry, depending on implementation and simplify oversight. However, such their available capacity and willingness; the existence an approach may be more prone to service interruption of an industry body that could ensure neutrality; and/ 20 In a bilateral architecture, each participant connects directly to other participants in the ecosystem without the existence of a central hub. While the data exchange is bilateral, an overarching multilateral framework and standardized APIs are defined for the ecosystem, ensuring these bilateral connections are uniform across participants. 21 In a centralized architecture, participants are connected to each other through a central hub such as a switch or an aggregator. Key Considerations for Open Finance  18 as it can have a single point of failure, requires setting Common principles on compensation from data up a central hub, and requires identifying or creating users to data holders can reduce complexity an entity to operate it. A hybrid approach is also by limiting variability and price discrimination, possible, in which different parts of the ecosystem use increasing transparency and market confidence. Any different approaches. For example, a bilateral approach compensation should be fair, commensurate to a could be used for data sharing while a centralized data holder’s marginal cost, and nondiscriminatory in approach could be used for payment initiation. Multiple order to support a level playing field across different bilateral or centralized architectures could also be providers. There could be differentiation in pricing used to simplify participation for different types of based on the type of data, customer segment, providers. For example, distinct architectures could products or services delivered or developed, type be created for different subsectors (e.g., banking, of APIs, type of data user, or other such aspects. For insurance, investments), thus simplifying participation example, free access could be mandated for direct for players who may only participate in one area. or unprocessed customer data while a sustainable Both existing infrastructure (e.g., payment systems, commercial model that supports fair compensation and credit information systems) and new infrastructure incentivizes investment and innovation could be set up for data sharing should have a sound legal basis for for processed or value-added data APIs. each material aspect of their activities – including new activities introduced in the context of open finance – The impact of pricing policies on public policy and should be authorized, regulated, and overseen. objectives should be considered if compensation rules are established. Pricing is likely to influence incentives to participate and innovate. If prices 10. PRICING — Monitor and influence are too high, competition could be hindered, as it pricing to support policy objectives would make it harder for new and smaller players Pricing is a critical element of open finance design to participate. High prices could also weaken the as it impacts the adoption and the development of business case for serving low-income customers open finance use cases. This section refers to pricing and traditionally excluded segments and could be between institutions that are data holders and data detrimental to financial inclusion goals. For example, users. While end customers may incur costs for using volume-based data access fees can put smaller products and services that avail data shared through players at an unfair disadvantage, limiting competition, open finance, fees to customers are generally not while bilateral pricing agreements may represent a contemplated in open finance frameworks. In an open barrier to participation in open finance. Reaching a finance framework, data holders incur costs for making pricing level that is as low as possible can support technical interfaces available to share customer data. policy objectives, especially competition, innovation, As mentioned in the previous section, when designing and financial inclusion. This may require putting the architecture for the ecosystem, the impact on in place a coordination mechanism and objective integration and operation cost implications for open criteria to facilitate agreement on specific levels of finance participants should be considered. Data compensation. Further, certain circumstances (e.g., the holders’ ability to recover these costs could act as an need to foster initial uptake) or policy objectives may incentive for better quality data and interfaces. On warrant delaying cost recovery or justify free access by the other hand, costs to data users may impact their data users. Compensation principles may be revised as incentive to participate or innovate. the ecosystem matures. A set of common principles on compensation can Regularly monitoring pricing levels is an integral reduce complexity and should support fairness. part of the oversight of open finance and Key Considerations for Open Finance  19 provides information to support authorities in the identification of the most appropriate corrective measures. If the market fails to deliver fair and transparent pricing consistent with public policy objectives, the relevant authorities may need to intervene to ensure alignment. Governance arrangements can have a bearing on pricing – from building consensus around a set of common principles to developing compensation models to updating these if needed. Key Considerations for Open Finance  20 Concluding Remarks T HE IMPLEMENTATION OF AN OPEN Data sharing is a fast-evolving space that will continue finance framework requires the intentional to change in the coming years. As more jurisdictions design of multiple interconnected elements set up open finance ecosystems, a bigger focus on involving a range of different stakeholders. Public cross-border connections between ecosystems is authorities play an important role in defining the likely to arise, with efforts to pilot cross-border use policy objectives for open finance, ensuring that the cases underway. An increasing number of countries design and implementation choices are consistent are already starting to focus on open data and how to with achieving those objectives, and guiding the bring more data effectively and safely from outside the overall enabling environment, including regulation, financial sector into the ecosystem. While this involves supervision, and oversight arrangements to support additional complexities, it also holds significant promise responsible open finance. With an appropriate design in for those currently excluded from the formal financial place, open finance can help close inclusion gaps and sector who may become visible by the integration of expand the availability and effectiveness of financial nonfinancial data sources. services. The guiding considerations presented in this document, evaluated in the context of the individual country’s conditions and needs, can help to achieve these outcomes. For a list of resources on open finance, please see: https://www.findevgateway.org/guide/2024/11/ open-finance-guide-to-knowledge-resources Key Considerations for Open Finance  21 cgap.org www.bis.org www.imf.org www.unsgsa.org www.worldbank.org