Open Finance is the future of banking – at least that’s the opinion of 86% of financial services professionals surveyed recently in Singapore and Hong Kong by Finastra. In fact, these professionals in these financial hubs were more optimistic about the impact of Open Finance – with benefits that will give consumers more control over their finances, increase financial inclusion, and help banks tap into larger markets –than any other market surveyed. But what exactly is this emerging model of finance and what is it about Asia’s financial services landscape that has led to this confidence? 

What is Open Finance?

Open Finance can be described as a natural evolution of Open Banking, which enables the sharing of basic customer account data with third parties via Application Programming Interfaces (APIs) and has enabled banks to innovate by leveraging cutting-edge technology developed by specialist fintechs. Open Finance extends this by enabling the sharing of a much broader range of financial data, meaning a consenting consumer could allow trusted third parties to access data on their entire financial footprint. This will increase innovation even further to give consumers access to a greater range of financial services – from banks and non-banks – leading to more control over their finances and the availability of fairer and more equal financial services. 

Digitalising SMEs is key to empowering communities in Southeast Asia

Whilst Open Finance is relatively new, it has significant potential to drive positive change in Asia. For instance, Southeast Asia is home to 290 million adults who have little or no access to the most basic financial services. Without being able to provide historic banking data, it is hard for people in this position to secure vital lending to help their families or small businesses, which is particularly important during times of crisis such as the current pandemic. Through Open Finance, lenders could instead reference alternative sources of financial data in order to approve loans. 

Asia’s Open Banking success sets the stage for Open Finance 

A key driver for Open Finance has been the success of Open Banking, where Singapore and Hong Kong have been amongst the global leaders. Today, 57% of financial services professionals in Singapore and Hong Kong see it as a “must have” and just 1% say it has not provided any benefits to their organization. This has created an ideal environment for Open Finance to thrive by enabling and normalizing collaboration between financial institutions and fintechs, which has in turn led to greater competition and innovation. A case in point is Tonik, Southeast Asia’s first licensed digital-only bank, which was built on modern cloud-based core banking system. Through Finastra’s open platform,, Tonik has been integrate solutions from various fintechs, enabling it to tailor its offering using the best available solutions and giving it the flexibility to expand its capacity and service offering in line with customer demands. 

Open Banking also helped banks to cope with the rapid increase in digital banking customers when the pandemic forced the closure of bank branches. Digital challenger banks and incumbents that had successfully engaged in digital transformation, using Open Banking model to create high quality digital services and robust back-end capabilities, reaped the benefits. Other banks have been catching up and many have leveraged data sharing via open APIs to integrate easily expandable cloud infrastructure and modern fintech solutions to improve the experience offered to digital customers. 

BaaS and embedded banking will further enable the growth of Open Finance in Asia

Another factor enabling Open Finance in Asia is the emergence of Banking as a Service (BaaS) and embedded banking. BaaS builds on Open Banking’s data sharing paradigm by enabling digital banks and other third parties to connect with banks’ systems directly via APIs so they can build banking offerings on top of the providers’ regulated infrastructure, whilst embedded banking allows the seamless joining of traditional financial services, such as payment processing, with other services on non-financial apps or websites. Between 44% – 47% of professionals in Singapore and Hong Kong told us their organizations have been deploying or improving BaaS or embedded banking capabilities in the last 12 months, which is higher than any other major financial hub. Whilst Open Banking was first led by banks in Europe, Asian banks have clearly recognised the potential of Open Finance and are leading the charge towards opportunity enabled by wider data sharing.

Over recent years the Open Banking model has transformed the banking industry and the way people engage with financial services. When the pandemic struck, many of those who were not already using digital financial services already were forced to convert, and these new habits are likely to remain. BaaS and embedded banking are now building on Open Banking’s foundations, with Singapore and Hong Kong taking the lead. However, whilst many institutions have started their investments in these new models, many have not. A lesson from Open Banking is that early adopters have enjoyed stronger market positioning and watched others having to play catch up, so banks should not delay investment in this next evolution in financial services. With this momentum towards Open Finance we will soon see consumers gaining fairer and more equal access to a greater range of financial services, with industry players finding a wealth of opportunities to tap into a larger market. 

This article was contributed by Luc Hovhannessian, Managing Director, APAC, Finastra

About the author

Luc Hovhannessian heads Finastra across the Asia Pacific region and is based in Singapore. He has 18 years’ experience managing, operating and selling complex software solutions in the fintech industry. Luc spent more than 14 years at software company Ullink, holding a variety of positions including Global Client Operations Director and ultimately Managing Director, ASEAN. Luc graduated with a Master’s degree in Mathematics, Software Engineering and Artificial Intelligence from Pierre and Marie Curie University in Paris.