Open Finance and Vulnerability: A policy discussion paper

The Lab’s new report ‘Open Finance and Vulnerability: A discussion paper‘, based on the insights of the Open Finance Working Group, explores the potential impact of open finance on the most vulnerable in society.

Open finance is a radical initiative that aims to ‘open up’ more data about people’s finances. The intention behind it – to give consumers greater control over their data and the power to make better financial decisions – is welcome. Mainstream financial services do not always work well for people, especially those in vulnerable circumstances. According to the Financial Conduct Authority, over 50% of UK adults are at risk of financial vulnerability.

But while the open finance movement is gathering momentum, we do not yet know much about the impacts of open banking (its predecessor) on people. The public also remains unconvinced of its benefits. This paper explains how open finance could exacerbate the risks that finance currently poses for people, especially those in vulnerable circumstances. Such risks include:

1. A reduction in the control people hold over data about them

2. Greater financial exclusion

3. Careless automation

4. The rising power of platform monopolies.

On the other hand, open finance could present opportunities to identify unmet needs. Realising this potential, and mitigating the major risks, will require policy makers taking action to:

1. Pro-actively tackle the new forms of market power that data enables

2. Tilt the playing field in favour of purpose-driven innovation

3. Give people with lived experience of vulnerability and their representatives a meaningful voice.

This paper offers twelve recommendations for policy makers and regulators to avoid the risks and realise the opportunities of open finance. Unless action is taken, existing power imbalances between industry and the public will be reinforced – albeit with the power likely shifting from banks to tech giants. Life for those in vulnerable circumstances will become more difficult. Regulators emphasise the importance of firms meeting the needs of customers with characteristics of vulnerability, and the need to make improvements where this is not happening. It is just as important to ensure that the needs of vulnerable people are considered in the development of new policy.

The report is based on the insights of the Open Finance Working Group – third sector organisations, first convened by the Lab and StepChange Debt Charity in 2020, working together to build understanding of open finance and its implications for individuals, communities and wider society.


We are holding a Transforming Data Network quarterly meeting on Wednesday 22 September. This meeting, for third sector reps only, is an opportunity to learn about the policy landscape relevant to the use of data and tech in finance, identify opportunities for influence, and meet like-minded people who want to make sure the future of finance works for everyone. It’ll be a chance to check-in on the open finance agenda too. Please email marloes@financeinnvoationlab.org if you are interested in attending.