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8 October 2024news

Open finance blurring insurance boundaries

The pace of “open finance” – an industry trend that is enabling greater convenience and transparency for consumers of financial services and products through more data sharing – is increasing and inevitable, according to a new report prepared by PwC Luxembourg and commissioned by Luxembourg for Finance (LFF).

The research argues that open finance is proving to be a revolutionary change in the structure of the financial industry. It is blurring the traditional boundaries between banking, insurance, asset management and payments – often bridged by intermediaries and brokers – merging these industries into a unified network powered by data, technology, and interoperability.

The era of open finance is already reshaping the structural outlook for the industry and is speeding up thanks to three core drivers: regulation, demographics and technology.

The report concludes that in the insurance industry:

Open finance will enable insurers to expand into new markets by partnering with FinTechs, insurtechs, and other innovative companies.

These partnerships will allow insurers to integrate their products with non-insurance offerings from their partners.

This integration will deliver a broader, seamless customer experience for clients.

The global insurance platform market, worth $81.7 billion at the end of 2023, is expected to grow by a CAGR of 13.8% to reach $156 billion by 2028, enhanced by open insurance APIs.

APIs are key to expanding data sharing, with the number of “calls” – requests for data exchange – between financial institutions projected to grow from $102 billion in 2023 to $580 billion by 2027, representing a CAGR of over 54%.

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