Carlos Figueredo, founder and CEO of Open Vector and former head of data standards at the Open Banking Implementation Entity (OBIE) tells Finextra Research that to transition from Open Banking to Open Finance, there needs to be a full internal cultural shift within the bank to maintain a defined focus on innovation and in turn, sustainability.

Figueredo highlights that “the days of brick and mortar branches are over. We are entering the age of Open Finance and true collaboration. Taking what we have learnt from Open Banking, we are now applying these teachings to other sectors and with that, we can then maximise the availability of data and empower consumers to manage their data.”

Social inclusion is the primary component to this, with financial inclusion being a secondary, but important driving force for Open Finance. However, as Figueredo points out, banks continue to be concerned about sharing data and “breaking the traditional model because their services are based on the ‘banked’ consumer, those that have smaller credit risk and hold a bank account.”

Figueredo asks: what about the millions of people who are unbanked? “This is where Open Banking and Open Finance bring in a complete new shake up and opportunity not seen in the history of banking. Banks, for the most part, do not see it this way; they see it from a commercial perspective.” He adds that the industry must now collaborate to innovate and support those neglected.

Taking Nigeria as an example, he explains that the country is in dire need of social and financial inclusion - a country with a population of 200 million people of which only 30 million are banked. With Open Banking, corruption and crime can be eradicated because the use of cash is eliminated, as one example of its benefits.

How will these lessons be applied to Sustainable Finance, an area that is slowly gaining visibility? Figueredo points out that to date, there are 72 countries where women do not have the right to open a bank account and this is an example of social exclusion that Open Banking will be able to break barriers around.

“This empowerment of data will continue to break down these barriers because consumers will want it, consumers will need it and you simply cannot stop innovation,” Figueredo says. But how can we ensure data movement across the supply chain is transparent and is conducted in a sustainable manner?

Figueredo states that it is a huge responsibility to understand and handle customer data and in turn, responsibly own and distribute that information under a regulatory standardised umbrella so that it can be utilised and accessed by third parties in the right format, under the right circumstances and ensure it is of benefit to the consumer.

He concludes with the point that consumers do not need to be educated about the provision of Open Banking: customers only care about access to services, not how it happens. “Do we educate the consumer, or do we ensure from a sustainability or security perspective that a consumer is protected by the regulations in place?

“We’re not really sure that consumers are eager enough to understand how that data is being used, so that is still a challenge,” Figueredo says, mentioning that in the next few years, we will be moving from Open Finance to Open Data where we have a real cross section across industries, which will make sustainability an easier goal.