Open data for finance as an emerging source of GDP growth

How can we create value from open-data ecosystems for finance —for both individuals and institutions? Banner image: Shutterstock/ PopTika

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Even before the COVID-19 crisis, policy makers in the OECD and beyond were identifying the potential for innovation and productivity growth that could be derived from building out digital financial infrastructure including greater sharing of financial data. This focus has helped give rise to the Open Banking Implementation Entity in the United Kingdom, the European Union’s second payment services directive, and broad discussion in the United States around a consumer-authorized data-sharing market, among other initiatives.

To what extent could open-data ecosystems for finance go beyond greater convenience and easier interactions between financial providers and their customers? Our research suggests that the upside in terms of generating GDP growth is considerable. At the same time, we find that the size of that GDP lift, and how the economic value can be shared among the various market participants, depend in large part on the design and working of each ecosystem, and in particular the degree to which data are standardized and how broadly they are shared.

In our recently published study, we focused on four regions—the European Union, India, the United Kingdom, and the United States—and identified seven mechanisms for value creation from the adoption of open-data for finance. For consumers, these ecosystems can increase access to financial services, including for individuals and small businesses who might otherwise be shut out for lack of credit history. They can also improve user convenience, including with potentially substantial time savings from less routine form-filling, among others, and provide a much larger range of financial product options. For financial providers, the value-creating mechanisms we identified include increased operational efficiency arising from more efficient data management, along with stronger fraud prevention, improved workforce allocation, and reduced friction from data intermediation, given the reduced need to pull in data from third-party providers.

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We sized 24 use cases across these seven mechanisms. Extrapolating to a country or regional level, our analysis suggests that the boost to the economy from broad adoption of open-data ecosystems could range from about 1 to 1.5 percent of GDP in 2030 in the European Union, the United Kingdom, and the United States, to as much as 4 to 5 percent in India. All market participants benefit, be they institutions or consumers—either individuals or micro-, small-, and medium-sized enterprises (MSMEs)—albeit to varying degrees.

For now, however, only a fraction of that potential value is being accessed, including in countries such as the UK which in some ways has pioneered open data in finance. We estimate the UK has accessed about 30 to 40 percent of the potential value, whereas the European Union and the United States are at about 10 percent of the potential. India, which has been building out its digital financial infrastructure on the back of its Aadhaar digital identification system, has managed to access about 60 percent of the value of open data for finance to date, we estimate, in part because small companies have sharply reduced the time they need to spend on filling in financial forms.

Capturing more of the potential value will require a greater degree of data standardization and broader data sharing. For now, both are quite varied across the four regions we examined.

In the European Union and the United Kingdom, for example, we find a high level of standardization combined with relatively less breadth of data sharing. By comparison, the United States has a broad range of data sharing, but data standardization is more limited.

For all countries interested in pursuing open data for finance ecoystems, key takeways from our research include the critical importance of establishing trust in the system, along with the infrastructure to support it. Financial data are particularly sensitive, and users are more likely to want to share data if they know what they are sharing and why that sharing is valuable to them.

Digital infrastructure is also a must, and ecosystems with high-assurance digital ID have an advantage in being able to control use of data and reduce friction in managing online accounts.

A final essential ingredient to create value from open data for finance is the role of innovation. Open data ecosystems are like sunlight rather than oil, and multiple actors can benefit, from traditional banking incumbents to technology platform-based players and new fintech startups. Expanding the boundaries of open-data enablement would make new types of use cases possible, fueling greater innovation and greater value capture.

Read the full paper: "Financial data unbound: The value of open data for individuals and institutions" and find out more about the technological, regulatory, and competitive forces moving markets toward easier and safer financial data sharing

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Olivia White

Senior Partner, McKinsey & Company

Olivia White, Senior Partner McKinsey & Company, Bay Area

As a member of the Financial Services, Risk & Resilience, and Social Sector Practices, Olivia advises banks and other financial institutions on a wide range of issues. She has led transformative impact for many global financial institutions and corporate business functions. She has also worked extensively on financial inclusion and broader economic development, with a primary focus in emerging markets. Along with her expertise in risk and financial inclusion, Olivia has led projects focused on foundation portfolio construction, customer experience, digital payments, operational improvement, and organizational design. She is also a co-leader of McKinsey’s knowledge efforts in risk management.

Olivia has led extensive research efforts related to financial inclusion and economic development, and efforts assessing the potential economic value from digital financial services in developing economies, examining the economics of global payment systems, and investigating risk associated with digitally enabled payments that serve financially excluded populations in the developing world. Her most recent research focused on the benefits and risks associated with Digital ID.

She publishes frequently on topics related to risk and financial inclusion, most notably through the McKinsey Global Institute and McKinsey on Risk. Prior to joining McKinsey, Olivia was a Pappalardo fellow in physics at MIT, where she conducted research both in physics and in neuroscience.


Anu Madgavkar, Partner, McKinsey Global Institute (MGI), New Jersey

As a partner of MGI, McKinsey’s business and economics research arm, Anu leads research focused on global labor markets and skills; gender economics; migration; inclusive growth; and applying technology to solving development challenges including financial inclusiveness. She also leads research efforts focused on India’s economic future. Anu has co-authored MGI reports including “The future of work after COVID-19”; “The future of women at work; “The power of parity”; “The social contract in the 21st century”; “Digital identification: A key to inclusive growth”; “People on the move: Global migration's impact and opportunity”; and “Digital India: Technology to transform a connected nation”.

Previously, Anu was a partner of McKinsey based in Mumbai, where she co-led McKinsey’s Financial Institutions practice in India. She has authored several reports and white papers on India’s economic growth and financial sector development.


Zac Townsend is a leader in McKinsey financial technology and banking digital business building practices. He works with clients on building digital businesses from scratch, transforming businesses to be digital-first, and partnering with or acquiring fintech companies. Previously, he was co-founder and head of product of Standard Treasury, where he built open banking platforms to connect banks and fintech companies. The company ultimately sold to Silicon Valley Bank. Zac also previously served as the inaugural Chief Data Officer of California. He was named to the Forbes 30 Under 30 list for Enterprise technology, and his commentary on fintech has appeared in the Financial Times, the American Banker, Slate, and other publications.