Join our webinar on July 31st: Supercharging Efficiency - AI in Mortgages  🚀

Embracing Open Finance: Exploring the Potential of PSD3 for the Mortgage Industry in the EU

Open finance
The new online mortgage application process significantly improved Bank Cler’s ability to distribute mortgages digitally. Compared to our previous channel, our reports show increasing volumes and a higher conversion rate
Natalia Slota
June 29, 2023

The mortgage industry in the European Union is on the brink of a transformative era with the introduction of Payment Services Directive 3 (PSD3) and the further development of Open Finance. These are set to revolutionise how consumers interact with their financial institutions including mortgage providers, empowering them with greater control, transparency, and access to personalised financial services. As PSD3 expands upon the Open Banking framework established by its predecessor, PSD2, it unlocks a treasure trove of possibilities, enabling borrowers to enjoy a seamless, convenient, and tailored mortgage journey. In this blog post, we will delve into the implications of PSD3 for both consumers and financial institutions with a focus on how it reshapes the lending landscape.

What is Open Finance and the new PSD3 Regulations?

Open Finance aims to revolutionize the industry by giving consumers greater control over their financial data and by fostering collaboration between financial institutions and third-party providers. It builds upon the principles of Open Banking, which were introduced under the previous Payment Services Directive 2 (PSD2) in the European Union (EU). However, Open Finance takes this concept to new heights by expanding the scope of data sharing beyond just payment accounts.

Under the proposed Payment Services Directive 3 (PSD3), the European Commission seeks to enhance the Open Finance framework by enabling individuals to securely share a wider range of financial data with authorized third-party providers. The measures outlined in this package address various aspects, including combatting payment fraud, improving consumer rights, promoting open banking, enhancing cash availability, and strengthening harmonization and enforcement.

Additionally, the proposal introduces a legislative framework for Financial Data Access, extending beyond payment accounts. It outlines clear rights and obligations for managing customer data sharing in the financial sector. Customers will be able to share their data securely with financial institutions and fintech firms, giving them access to innovative, cost-effective and personalised financial products and services.

So, what does this mean exactly? Well, imagine a world where your financial information isn't confined to just your payment accounts. With PSD3, the boundaries are pushed further, enabling you to share a wider range of financial data, allowing for innovative and personalized services to cater to your unique needs. It's like unlocking a treasure trove of possibilities, where your financial journey becomes more seamless, convenient, and tailored to your preferences.

By embracing Open Finance and PSD3, the financial industry enters a new era of collaboration, innovation, and customer-centricity. Consumers gain greater control and visibility into their financial lives, while financial institutions and fintech companies have the opportunity to deliver more personalized, innovative services. The stage is set for a transformative shift that promises to reshape the way individuals interact with their finances and unlock new possibilities for the mortgage industry.

PSD3 and the issues it’s solving

But why is the EU pushing for this regulation? Let's explore the issues it aims to solve.

The financial world can sometimes feel like a labyrinth, with limited access to comprehensive financial data being one of the primary challenges consumers face. PSD3 seeks to tear down these walls, granting you broader access to your financial information beyond just your payment accounts. No longer consumers will be confined to fragmented views of their financial health. Instead, you'll have a holistic understanding of your financial situation, paving the way for smarter decision-making and greater financial well-being.

PSD3 addresses critical issues within the financial industry by expanding access to comprehensive financial data, enhancing transparency and data control, and fostering healthy competition. This regulatory framework sets the stage for a more consumer-centric and innovative financial ecosystem, empowering individuals to make informed financial decisions and facilitating the development of personalized financial services. By embracing the changes brought forth by PSD3, the industry moves closer to a future where individuals have greater control over their financial lives and can reap the benefits of a more transparent, inclusive, and competitive financial landscape.

Benefits for Consumers and Financial Institutions

Transparency is a crucial aspect that PSD3 tackles head-on. In an era of data breaches and privacy concerns, it's only natural for consumers to crave a greater understanding of how their data is used and shared. PSD3 introduces measures to ensure that you have full visibility and control over your data sharing relationships. It's about putting the power back into your hands, allowing you to make informed choices about who gets access to your data and for what purposes. Trust and confidence in data sharing are at the heart of PSD3's mission.

But it's not just consumers who stand to benefit from this regulatory leap forward. Financial institutions and fintech companies are in for a ride too.

PSD3 presents exciting opportunities for these market players. Financial institutions can tap into comprehensive data sets with authorized access, gaining deeper insights into customer behaviour and needs. Armed with this valuable information, they can deliver tailored products and services, ushering in a new era of personalized banking experiences. On the other hand, fintech companies are well-positioned to explore innovative business models and revenue streams. With PSD3, they can unleash their creativity, leveraging the broader data-sharing landscape to offer groundbreaking mortgage solutions and expand their customer base.

Of course, navigating this new regulatory landscape won't be without its challenges. Market participants will need to ensure compliance with data protection standards, adapt to evolving technical requirements, and address operational hurdles. But the potential rewards far outweigh the hurdles, as embracing the Open Finance mindset is a gateway to a brighter future for the financial industry.

What does it mean for the mortgage industry?

PSD3 holds immense implications for the mortgage industry, ushering in a wave of disruption and innovation. By granting consumers greater control over their financial data and fostering a more competitive landscape, PSD3 paves the way for a transformed mortgage experience.

Borrowers can expect personalized offerings, streamlined application processes, and enhanced transparency. With access to a wider range of financial data, lenders can make more accurate assessments of borrowers' creditworthiness and tailor mortgage products to suit individual needs. Additionally, the integration of Open Finance principles opens up avenues for new players, such as fintech startups or new brokers, to enter the mortgage market and challenge traditional lenders. The

As competition intensifies, financial institutions will be compelled to refine their offerings, improve customer service, and explore innovative technologies to stay ahead in this dynamic landscape. The mortgage industry is on the brink of a revolution, where traditional barriers are dismantled, and borrowers are empowered with greater choices and improved access to financing options.

How Fintech startups can embrace the PSD3?

Fintech startups are already transforming the mortgage industry through Open Finance and the PSD3 regulation will only accelerate this change. Oper Credits is a prime example, leveraging data from the digital ecosystem to digitize the mortgage process. By eliminating paper-based procedures, they create a fast, secure, and seamless experience for borrowers and lenders. Through Open Finance, Oper Credits accesses comprehensive financial data, streamlining applications and enabling personalized offerings. Lenders benefit from efficient underwriting processes and data-driven decision-making. With fintech startups like Oper Credits leading the way, the mortgage industry is undergoing a digital transformation that promises convenience and efficiency.

With PSD3 and the advent of Open Finance, the mortgage industry in the EU stands on the precipice of remarkable transformation. Consumers will relish the newfound transparency, control, and trust they have over their financial data sharing relationships. Financial institutions and fintech companies will seize the opportunities to innovate, tailoring mortgage products and services to meet the unique needs of borrowers. The stage is set for increased competition, driving efficiency and potentially offering borrowers better rates and terms. As we embrace this exciting future, the mortgage industry and its stakeholders have an extraordinary opportunity to shape a landscape that empowers borrowers, fosters financial well-being, and redefines the meaning of personalized mortgage experiences. The journey to an Open Finance-driven mortgage industry has just begun, and the possibilities are limitless.

If you'd like to discuss this topic in more detail and see Oper in action, you can book a call with our representative here.


Stay updated with Oper by signing up to our newsletter

Subscribe to our list and be the first to receive industry insights straight to your inbox

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Keep reading

The future of mortgages starts today

Empower your advisors with Oper’s cutting-edge platform to seamlessly generate and qualify mortgage leads while crafting solutions that convert. Oper helps you elevate your mortgage offering into the 21st century.