Open Finance in 2020: Open Finance was emerging as a possible next stage in the development of UK financial data sharing.

The idea was simple but significant. With their permission, customers could allow regulated services to access information held across more of their financial products.

For mortgage advisers, this raised practical questions about fact-finding, affordability, remote advice and data security.

At a Glance

Open Finance aimed to extend the principles of Open Banking beyond payment accounts.

It could eventually allow customers to share information about mortgages, savings, insurance, pensions and investments through secure digital systems.

For mortgage networks in 2020, the immediate priorities were:

• understanding customer consent;
• reviewing digital onboarding;
• protecting personal information;
• reducing unnecessary document collection;
• preparing advisers for more connected financial services.

Open Finance remained under development. It was not a replacement for regulated advice or an adviser’s professional judgement.

What Was Open Finance in 2020?

Open Finance described the proposed extension of Open Banking-style data sharing across a wider range of financial products.

Open Banking mainly concerned payment account information. Open Finance considered whether similar principles could apply to:

• mortgages;
• savings accounts;
• consumer credit;
• pensions;
• investments;
• insurance products.

Customers would remain in control of whether access was granted. Data should not be shared simply because the technology allowed it.

In December 2019, the Financial Conduct Authority opened a Call for Input on Open Finance. It asked how wider data sharing could improve competition, access and customer outcomes.

The COVID-19 pandemic then made digital access more important. Advisers, lenders and customers had to complete more of the mortgage process remotely.

How Did Open Finance Differ From Open Banking?

Open Banking provided the foundation for secure account-data sharing.

With consent, an authorised provider could access selected payment account information. This could help a customer review spending, manage cash flow or complete certain financial checks.

Open Finance proposed a wider view.

Instead of examining one payment account, a future service might connect information from several financial products. For example, it could bring together mortgage balances, savings, credit commitments and pension information.

This distinction mattered for mortgage advisers.

A broader data set could support a more complete financial discussion. However, more data would not automatically produce better advice. Information still needed context, explanation and professional assessment.

Technology could improve access to facts. It could not decide what was suitable for an individual customer.

Practical Uses for Mortgage Advisers

During the 2020 lockdown, many firms adopted video meetings, electronic signatures and secure document-upload systems.

Open Banking tools could also support parts of a mortgage application by allowing customers to share verified account information.

Potential uses included:

• reviewing income deposits;
• identifying regular financial commitments;
• supporting affordability discussions;
• reducing repeated requests for bank statements;
• checking information provided during fact-finding;
• completing more of the process remotely.

These tools could reduce administration when they were used correctly. They could also make it easier for customers to provide information without sending documents by email.

However, automated information still required review. A bank transaction might show that a payment happened, but not always explain its purpose or whether it would continue.

Mortgage advisers therefore remained responsible for asking questions and understanding the customer’s circumstances.

Consent, Security and Customer Understanding

Open Finance depended on trust.

Customers needed to understand:

• what information was being requested;
• why the information was needed;
• which organisation would receive it;
• how long access would continue;
• how consent could be withdrawn.

A faster process was not automatically a better process. Customers could become uncomfortable if data access was requested without a clear explanation.

Mortgage firms also needed suitable security controls. Personal financial information should only be accessed through approved systems and for a defined purpose.

Appointed representative firms had a further consideration. New technology could affect compliance procedures, record keeping, data protection and staff training.

A mortgage network for advisers could help establish how approved technology should be introduced and monitored across its firms.

What Was the Mortgage Network’s Role?

A mortgage network’s role extended beyond providing software.

It also needed to consider:

• whether a system was suitable for regulated activity;
• how customer consent would be recorded;
• how information entered the firm’s CRM;
• which users could access the data;
• how long records would be retained;
• what training advisers required;
• how digital processes would be supervised.

This was particularly important in 2020. Many firms had adopted remote processes quickly because face-to-face meetings were restricted.

A network could help its appointed representatives introduce technology within a consistent operating framework. This reduced the risk of each firm creating separate procedures without central oversight.

Connect’s mortgage broker technology brings together adviser systems, case management and compliance support within the wider network structure.

Could Open Finance Replace Mortgage Advice?

No.

Open Finance could improve access to information. It could not replace a regulated suitability assessment.

Mortgage advice involves more than collecting figures. Advisers must understand objectives, preferences, risks and future plans. They must also explain recommendations in a way the customer can understand.

Data might show a customer’s current financial position. A conversation reveals what that position means.

Customers seeking support could use the Connect Experts mortgage adviser directory to search for advisers by location, language and mortgage experience.

Connect Experts is a directory and matching service. Advice is provided by the adviser or firm selected by the customer.

Preparing for More Connected Financial Services

In May 2020, Open Finance remained a developing regulatory and technical concept.

Mortgage firms did not need to rebuild every process immediately. However, they did need to examine whether their systems could support secure digital advice.

Practical preparation included reviewing:

• remote fact-finding;
• secure customer portals;
• electronic document collection;
• consent records;
• access permissions;
• adviser training;
• network oversight.

The lasting lesson was not that every process should become automated.

It was that technology should remove unnecessary friction while preserving responsibility, security and human judgement.

For advisers considering stronger technology, compliance and business support, explore the Connect Network.