2025: Four ways open finance and smart data could have a positive impact

Co-written by Louisa Shanks and Lubaina Manji, members of the Open Up 2020 team

 

Over the last few years we have been running the Open Up Challenges, aimed at unlocking the power of open banking. It’s clear today that open banking is helping people across the UK with over 2 million regular users; almost half (47%) of adults in the UK say they would be happy to use an app or tool to manage their money, rising to 67% for those aged 18-34. Last year, the government initiated a Smart Data Review where they consulted on how to improve customer outcomes by accelerating the development and use of Smart Data in sectors beyond banking.

To showcase the potential for open finance and smart data to bring about exciting new possibilities for helping people have easier, cheaper and more meaningful financial lives, we’ve crafted four stories. These stories illustrate how embracing new tech powered by smart data  can positively impact people at the different stages of their life.

Meet Efiya, Sarah, Kam and Robert, living in 2025. Find out about their lives and how they can be supported through the power of smart data.

Black woman with white braids, wearing a black t shirt and camel jacket

Efiya

Efiya is 23 and lives in Leeds, where she works in a restaurant whilst trying to build up a reputation as a graphic designer. Occasionally, she gets freelance design gigs which help top up her income but this varies from month to month so her income fluctuates. She has trusted her financial life to one app which does everything for her. 

Her tax as a freelancer is automatically calculated and put in a separate, secure account that’s released when her tax return is due each year. 

Last month, Efiya’s bike was stolen and she had to get a new one. Luckily, the restaurant she works at uses a service that allows her to access the wages she’d already earned that month, so she could access the extra cash and avoid taking out a payday loan or going into her overdraft.  She paid for the bike via her smart speaker once she had found the model she wanted – she stopped using payment methods like debit cards years ago. When she bought the bicycle, Efiya was automatically offered an insurance quote via chat in her money app. Efiya could respond and chose to take out the insurance in 60 seconds, relieving her worry about getting it stolen again.  She’s just turned on the auto-saving feature on her account to help build up a rainy day savings fund in case something does go wrong in the future. Efiya has selected which subscriptions she doesn’t always need, and they’re automatically paused if her bank balance drops below a certain threshold by the middle of the month. 

Efiya’s money app is also keeping track of her rental payments, so that if she needs a loan or wants to buy a house with friends in the future, this data will be sent straight to the loan provider, giving them a holistic view of her financial life without the need for a credit score. Efiya likes to support local causes where she can; when she’s had a big graphic design job in, she will tell her smart speaker to switch on a feature that allows her to round up spare change from her purchases and donate these to organisations in her area.  

Asian woman holding a child, dressed in pink

Sarah

Sarah is 38 and works full time as programme manager in Cardiff, where she lives with her partner and one year old daughter Lin. Sarah has just recently started to invest in green and sustainable businesses, which is not something she thought was for her but has been guided through it using a chatbot that could analyse exactly how much she could put away without feeling the pinch. 

Sarah has also opened a junior investment account for Lin, which uses roundups on all her purchases to add to the account. Sarah and her partner are looking to move house and were able to get an instant recommendation on the best mortgage provider and an accepted loan offer through their digital IDs. 

This ID also holds all of the information on Sarah’s pension pot, which is automatically updated every time she moves company and gives Sarah a clear overview of how much money she’ll have at retirement plus forecasts if she was to increase or decrease her contribution. Sarah has control over these pensions – she can see which funds her pension is invested in and as she’s committed to investing in sustainable businesses, has the option to withdraw from a particular fund if it doesn’t align with her values.  

Sarah has recently bought a new electric car so that she can visit her parents who live in Birmingham.  She didn’t know where to start looking so used an online concierge service to recommend the most suitable car for her and find the best deal.  The service was also able to get her insured with premiums based on her exemplary driving behaviour rather than just her age or postcode which reduced the cost significantly. 

Sarah and three friends do a monthly challenge where the carbon footprint of all their purchases is measured against each other, with the most green automatically getting £10 each from the rest of the group.

Kam

Kam is 54 and lives in Suffolk where he works part time as a social worker. Kam shares the caring responsibilities for his elderly father with his sister, who lives close by.

Kam’s father is in the early stages of dementia and is starting to forget things more regularly. Kam and his sister are able to keep an eye on him using a digital tool that, with their father’s permission,  alerts them to any unusual bank transactions or if the temperature in his house drops below a threshold. This helps Kam and his sister have peace of mind that their father isn’t falling victim to fraud and keeps them aware of any unusual patterns of behaviour. 

As Kam is working part time, he’s entitled to a small amount of extra income from the Government, which is automatically put into his account each month in the form of the new UK central bank-backed digital currency and without the need for Kam to prove his income as it uses his digital ID that is connected to his financial history. 

Kam is trying to build up a savings pot for when his son finishes university, so is using round ups to sweep spare change into a savings account that automatically switches to whichever provider has the best interest rate. When his son comes home from university and wants to use the car, he’s able to get insurance by the hour, with the cost automatically split between Kam and his son. 

older man using an iPad

Robert

Robert is 76 and lives in Kent, where he moved upon retiring five years ago.

Robert lives on his pension and is able to see his entire pot in one place using an app on his iPad. This has collated all of the pensions from his various workplaces and combined it with his state pension. His pension automatically moves into a accessible savings account each month, and Robert chooses how much to withdraw into a current account each month, changing the amount if he needs to. When Robert goes abroad to visit friends, he uses a card that’s automatically connected to his bank account and offers him the best exchange rate so he doesn’t need to bother with opening another account or topping up a prepaid card. Robert only uses green energy suppliers and is able to swap tariffs automatically to ensure that he is never overpaying and due to his age, his supplier automatically reduces the costs in the winter. 

While he is happy to use his iPad to access the pension app, which admittedly he needed help to set up, he struggled with his day to day banking when his local branch closed two years ago.  Recently though, a community bank has been set up in his town and he is able to directly engage with a person through its video booth which he much prefers.  All his friends can use the community bank as well because they can use its kiosks to do their banking regardless of where their pension is held or who they bank with. Robert finds this local service very useful especially as he prefers to take out a cash lump sum to help him budget during the week. 

References

  • Open Banking https://www.openbanking.org.uk/about-us/latest-news/real-demand-for-open-banking-as-user-numbers-grow-to-more-than-two-million/
  • Opinium Research on behalf of Nesta Challenges, sample of 2,000 UK adults between 22 and 24 September 2020. Data has been weighted to nationally representative standards. 

You might also be interested in...

The top four money management apps crowned winners of Open Up 2020

News

How money worries are impacting our mental wellbeing

Blog

Top tools to help people take control of their finances

Blog

Who are the Affordable Credit Challenge winners helping the UK access fair credit?

Blog

Explore