Open Finance in Practice: 2 Use Cases of the FiDA Regulation

With the emergence of the FiDA regulation, Open Finance is taking concrete shape across Europe. Whilst the strategic significance of open, customer-centric data ecosystems is becoming increasingly clear, attention is now turning to the question of how financial service providers can translate the new regulatory framework into tangible value creation.

For the first time, FiDA establishes the foundation for standardised, cross-institutional access to and exchange of financial data — extending well beyond the scope of existing Open Banking approaches.

In this article, we examine two illustrative use cases that demonstrate how financial service providers can leverage FiDA to enhance customer experiences, optimise decision-making processes, and capture new market share.

FiDA enables users, for the first time, to consolidate data from a wide range of financial services within a single, centralised dashboard. Bank accounts, insurance policies, investments, and loans can be aggregated and presented in a unified view across institutions. Particularly noteworthy is that this level of transparency is achieved independently of any one leading provider. For the customer, this means — for the very first time — a complete and up-to-date overview of their financial situation, without the need for separate logins or manual research, and on the basis of a mandatory, user-authorised exchange of data between institutions.

Building on this holistic data foundation, financial service providers can go considerably further than mere transparency. Automated analyses make it possible to systematically evaluate existing products and present customers with opportunities for optimisation — whether through more cost-effective account models, alternative credit structures, lower-cost investment products, or the identification of duplicate or excessive insurance coverage. A wealth manager might, for instance, propose cost-optimised portfolio structures; a bank could highlight targeted refinancing options; and an insurer might recommend tailored adjustments to the level of coverage.

Strategically, this opens the door for institutions to establish new comparison and switching services, positioning themselves as the customer's primary digital financial interface. Any institution that offers such a "Financial Home" not only strengthens customer loyalty but also establishes itself as a trusted partner for holistic financial decision-making. In addition, new revenue opportunities arise through data-driven services such as automated needs analyses and personalised optimisation recommendations.

The transparent insight into competitor products also provides valuable intelligence for an institution's own product strategy, supporting targeted differentiation in the marketplace.

FiDA also fundamentally alters the landscape for lending. Whilst institutions are already making increasing use of disruptive technologies such as artificial intelligence to inform credit decisions, this development is taken to an entirely new level under FiDA. Banks gain access — again, exclusively upon explicit customer consent — to relevant financial data held by other institutions and service providers. This data, too, can now be systematically integrated into the credit decision process in real time for the first time.

At its core, the focus of credit assessment shifts from static metrics towards a dynamic cash flow analysis. External account transactions, recurring income, variable expenditure, existing loan and leasing obligations, as well as emerging financing models such as Buy Now Pay Later, can all be automatically incorporated into the credit model. The result is a considerably more realistic picture of a borrower's actual financial resilience.

This expanded data foundation enables a new generation of risk models:

• Finer segmentation of customer profiles
• Earlier identification of stress scenarios
• More accurate prediction of repayment probability across the full credit lifecycle

Credit decisions thus become not only faster, but also more robust. In many cases, decisions can be taken in a fully automated and near-real-time manner — a development that can significantly increase conversion rates in digital new business for institutions that adopt FiDA swiftly. At the same time, lending terms can be more individually tailored, as pricing, tenor, and collateral requirements can be aligned with the borrower's actual risk profile. This enables institutions to strengthen their competitive position whilst minimising default risk. Through the seamless integration of automated credit decisions into digital customer journeys, an institution positions itself as a reliable, data-savvy financing partner in the era of Open Finance.

The use cases outlined above illustrate, by way of example, how FiDA can act as a catalyst for new, data-driven business cases. They represent, however, only a fraction of the opportunities arising from the new regulatory framework. In a forthcoming blog article, we shall explore further areas of application and assess which financial service providers stand to benefit most.