The digital transformation of financial services in the European Union (EU) is progressing rapidly, driven by changing consumer expectations, technological advancements, and regulatory initiatives. Recent developments in the European Parliament related to the payments and financial data access package (PSD3, PSR, and FIDA) have brought the transition from open banking to open finance into sharp relief. The outcome of some of the key negotiating points, including around proposed new measures to mitigate fraud, may ultimately affect the roll-out of open finance globally.

This IIF Staff Note examines the evolution of these initiatives, including the latest amendments concerning fraud, scams and strong customer authentication, and offers insight into their impact on financial institutions, noting their potential to increase innovation, enhance competition, and strengthen consumer protection in the financial services sector while also acknowledging that these regulations may prove complex and costly for the industry to implement. As the legislative process moves forward, continued industry engagement will be crucial to influence the finalization of the regulatory texts and the subsequent development of technical standards to shape a more balanced and effective open finance ecosystem that benefits all stakeholders.