Open Finance After Open Banking: What FiDA Could Change in Europe

Banking used to mean branches and paperwork. Then it became an app, a card, a notification, a spending chart, a salary arriving at midnight, a rent payment leaving too quickly, and a quiet little panic every time your balance dropped below what you expected.

Open banking was the first big crack in the wall. It let people connect their bank accounts to other apps, giving fintechs permission to see account data or initiate payments. In Europe, this came through PSD2, the regulation that helped turn bank accounts into something other companies could build around. But open banking was always limited. It mostly looked at payment accounts. It told part of the story, not the whole thing.

Now Europe is preparing for the next version: open finance.

The name sounds boring. The consequences might not be.

FiDA, short for the Financial Data Access framework, is the European Union’s attempt to move beyond open banking and create a wider system for financial data sharing. The European Commission describes it as a proposal for responsible access to individual and business customer data across a broad range of financial services. In simpler terms: not just your current account, but potentially data linked to savings, loans, mortgages, insurance, pensions, investments, and other parts of your financial life.

Open banking was about seeing your bank account in another app. Open finance is about seeing your financial life in one place.

That sounds useful. It also sounds uncomfortable.

Because money is not just money anymore. It is data. It says where you live, how you move, what you eat, who you pay, whether you have savings, whether your insurance is expensive, whether your business is healthy, whether you are one bad month away from using credit. Financial data is intimate. It is not like choosing a playlist or saving a pair of trainers to a shopping cart. It is a map of your habits, stress, risk, ambition, and sometimes your mistakes.

That is why FiDA matters. It is not just another Brussels regulation with a long acronym and a PDF trail. It is a fight over who gets to use financial data, under what rules, and for whose benefit.

Open banking was the warm-up act. FiDA is the main stage.

The promise is easy to understand. Imagine applying for a mortgage without uploading the same documents five times. Imagine switching insurance because another provider can instantly understand your current cover. Imagine a personal finance app that does not just show your current account balance, but your loans, pension, savings, subscriptions, investments, and insurance in one clean view. Imagine a small business getting a loan based on a live picture of its actual financial position, not a messy bundle of PDFs, bank statements, and guesswork.

That is the open finance pitch. Less friction. Better products. More competition. More control for the customer.

But the pitch has another side. If financial data starts moving more freely, the companies best at collecting, analysing, and monetising data will want in. Banks fear being pushed into the background. Insurers worry about sensitive risk data being used in ways that damage the principle of shared risk. Consumer groups worry that “personalisation” can quickly become discrimination with better branding. Big Tech is watching because financial data is the kind of data that makes every other data point more valuable.

In September 2025, the Financial Times reported that the EU was moving toward excluding major US tech groups such as Meta, Apple, Google, and Amazon from the new financial data-sharing system, amid concerns that Big Tech could use financial data to dominate customer relationships and weaken European financial firms.

That is the political tension at the heart of FiDA. Europe wants innovation, but not a data free-for-all. It wants competition, but not another market where the biggest platforms eat the interface, the customer relationship, and most of the value. It wants customers to control their data, but it also knows most people do not read consent screens. They tap accept because they want the app to work.

Open finance is built on consent. But consent is only meaningful if people understand what they are agreeing to.

That is where the story gets messy.

The clean version says: the customer owns the relationship. They decide who gets access to their data. A bank, insurer, or financial institution holding the data must make it available to approved third parties if the customer asks. Those third parties can then build better services. Everyone wins.

The real version is harder. What data counts? Who gets access? How is access priced? Who is liable when something goes wrong? What happens if a customer shares data with an app that later misuses it? How do you stop companies from designing dark-pattern consent flows that technically ask permission while nudging people into giving away more than they realise?

These questions are why FiDA is still being negotiated. The Commission first proposed the framework in June 2023 as part of a broader financial data access and payments package, alongside PSD3 and the Payment Services Regulation. The European Parliament’s legislative tracker says the proposal is designed to set rules for the access, sharing, and use of certain categories of customer data in financial services, beyond payment accounts.

The Council of the EU reached its negotiating position in December 2024, saying the framework aims to make consumers’ financial data more accessible and open access between financial institutions to each other’s customer data.

So the direction is clear, even if the final shape is not.

For fintech companies, FiDA could be a big unlock. Open banking already helped create account aggregation apps, budgeting tools, alternative lenders, payment initiation services, and new forms of credit assessment. But many fintechs have been building with a partial view of the customer. They can see spending, income, and transactions, but not necessarily the full picture of assets, liabilities, pensions, insurance, or investments.

FiDA could change that.

A wealth app could understand someone’s full financial position before suggesting how much they can invest. A lending platform could assess affordability with richer data. An insurance challenger could make switching less painful. A pension tool could help younger workers understand retirement savings before they are 55 and suddenly panicking. A business finance platform could connect cash flow, loans, invoices, and insurance into one dashboard.

This is the part that feels genuinely useful. Europe has millions of people with fragmented financial lives. One bank account here, a savings account there, an old pension in another country, insurance documents in a portal nobody logs into, a mortgage dashboard that looks like it was built in 2009, and three apps that all claim to help but only see one slice of the pie.

Open finance could make that fragmentation feel less chaotic.

It could also make finance feel more ambient. Less like logging into separate institutions, more like having a financial layer that moves with you. Your banking app could become your money control room. Your accounting tool could become your lender. Your insurance app could become a risk assistant. Your pension provider could become part of your everyday financial planning, not just a letter you ignore once a year.

That is the user-friendly version.

The industry version is more brutal.

FiDA could force traditional financial institutions to share data they have historically controlled. Banks, insurers, pension providers, and investment firms would no longer be able to rely on data lock-in in the same way. If a customer wants to move their data, the institution may have to let it move. That changes the balance of power.

For banks, this is familiar. PSD2 already forced them to open parts of their infrastructure. Some adapted. Some complained. Some built APIs because they had to, then later realised those APIs could become commercial channels. Open banking did not kill banks, but it did weaken the idea that the bank owns the customer interface by default.

FiDA could do the same across more of finance.

For insurers, the mood is more nervous. Insurance is built on data, but also on pooling risk. If too much data flows too easily, insurers worry that the market could become more segmented. The low-risk customer gets better deals. The high-risk customer becomes more expensive. Personalisation sounds attractive until it starts pricing people out of products they need.

Consumer advocates have raised similar concerns. Finance Watch warned that FiDA could create risks if large amounts of consumer data are used for creditworthiness checks, insurance pricing, or other sensitive decisions in ways that lead to mis-selling, over-indebtedness, or financial harm.

This is the part Europe has to get right.

There is a fine line between helpful personalisation and financial sorting. One version of open finance helps a 27-year-old freelancer prove they have stable income, even without a classic employment contract. Another version quietly labels them risky, expensive, or not worth serving. One version helps people find cheaper insurance. Another version uses behavioural data to price them with uncomfortable precision. The same data can empower or exclude. The difference is governance. That is why FiDA is not just about APIs. It is about trust infrastructure.

Europe’s fintech story has always been shaped by regulation. PSD2 made open banking a legal reality. GDPR gave Europe a language for data rights. MiCA created a crypto framework. DORA pushes financial firms to take digital operational resilience seriously. The AI Act brings new obligations for certain types of automated decision-making. FiDA sits inside this broader European habit: regulate the rails, then let companies compete on top. Sometimes that makes Europe slower. Sometimes it makes Europe stronger.

The American tech model often moves fast and fixes later. The European model tries to define the rules before the market becomes impossible to reshape. That can be frustrating. It can also prevent the worst version of the future from becoming the default.

FiDA is very European in that sense. It assumes financial data should move, but not without rules. It assumes competition is good, but not if it hands the whole market to a few giant platforms. It assumes consumers should have control, but not in a fake way where responsibility is dumped onto individuals through unreadable consent screens. The challenge is making that philosophy work in real life.

Because people do not want “data portability.” They want their mortgage application to be faster. They want cheaper insurance. They want to understand where their money goes. They want fewer forms. They want less admin. They want to switch providers without feeling like they are moving countries. They want financial products that understand them without exploiting them. That is the real test for FiDA.

Not whether it creates another compliance project. Not whether banks and fintechs can produce another stack of standards, dashboards, and industry working groups. The test is whether normal people notice anything better.

A good FiDA future looks like this: you open one trusted app and see your financial life clearly. You know who has access to your data. You can revoke that access without sending an email into the void. You get better offers because providers can understand you more accurately. You are not punished for sharing data. You are not tricked into sharing more than you need to. You can move through the financial system with less friction and more leverage.

A bad FiDA future looks like this: consent banners everywhere, confusing permissions, unclear liability, expensive implementation, weak consumer understanding, and a new class of data brokers sitting between people and their money. Banks complain, fintechs struggle with access, insurers resist, customers tune out, and the whole thing becomes open banking 2.0 with bigger datasets and the same old trust problems.

The difference will come down to execution.

For European fintechs, the opportunity is not just access to more data. It is the chance to build products that feel less shallow. The first generation of fintech made finance prettier, faster, and more mobile. The next generation has to make it more connected. Not just better interfaces, but better context.

That matters because financial life has become more complicated for young Europeans. Housing is expensive. Work is less linear. Freelancing, side income, cross-border work, student debt, delayed home ownership, crypto experiments, pension anxiety, and subscription overload all sit inside the same messy personal economy. A simple banking app can show what happened yesterday. Open finance could help explain what it means for next year. That is powerful.

But it also means the companies building in this space need to earn trust differently. The cute card and slick onboarding are not enough. If a fintech wants access to someone’s pension, mortgage, insurance, and investment data, it has to feel serious. Not boring, but serious. The brand has to communicate control. The product has to make consent visible. The business model has to be clear. The user should understand why the data is needed, what value they get, and how to leave.

The winners in open finance may not be the loudest apps. They may be the ones that make complexity feel calm.

There is also a bigger strategic question. Does FiDA help Europe build its own financial technology layer, or does it simply prepare better data for global platforms to use? This is why the Big Tech debate matters. If open finance turns into another market where European institutions do the regulated heavy lifting while non-European platforms capture the customer relationship, the political backlash will be obvious.

Europe does not want to become the back office of its own financial system. That is why FiDA could become one of the most important fintech regulations of the decade. Not because consumers will suddenly start talking about it. They will not. Nobody is going to bring up the Financial Data Access framework over drinks unless they work in policy, compliance, or product strategy. But people may feel its effects in the apps they use, the products they switch to, the loans they qualify for, and the way their financial lives become easier to navigate.

Open banking changed the bank account from a closed box into a connected product. Open finance could do that to the rest of money.

The question is whether Europe can build a system that gives people more control without turning their financial lives into raw material for whoever has the best algorithm. That is the balance FiDA has to strike. More access, but not less protection. More competition, but not more confusion. More personalisation, but not more exclusion.

If it works, open finance could make financial services feel less fragmented, less defensive, and less trapped inside old institutions. If it fails, it becomes another acronym in the long history of regulations that promised empowerment and delivered paperwork.

For now, FiDA is still a proposal moving through Europe’s political machine. But the direction is already visible. The future of finance will not just be about who holds your money. It will be about who can read your financial life, who can act on it, and who you trust enough to let in.

Photo by Andrea De Santis on Unsplash