Open Finance: Mortgage and SME lending

Building DISTINCTIVENESS FOR YOUR BUSINESS

We kicked off 2026 by attending the Mortgages and SME Finance TechSprints Showcase at the Financial Conduct Authority, London.

The event and conversations were an early opportunity to discuss with regulators, business leaders and start-ups in this sector, the key considerations for lenders and mortgage providers to develop solutions moving forward.

Top three headlines

• Open Finance is a top priority for the FCA and the direction of travel for both traditional, neobanks, and financial institutions. Over the next year, regulators are going to move swiftly to enable organisations to develop products with Open Finance

• Data consolidation is going to be integral in facilitating inclusive development of financial products. Institutions that have a customer + data led approach are going to win in this space, and fast!

• Changing the approach to decision making is essential and this is where the leaders within the organisation need to step-up. Building products with Open Finance means that data should enable foresight and forward thinking decision making - a predictive approach to determining potential of a business.

Open Finance is not about looking backwards more efficiently. It’s about looking forwards - responsibly. With practical data consolidation, consent and trust based journeys, and regulations to support, the feasibility of Open Finance is more real than it has been ever before.

Colin Payne, Head of Innovation at the FCA

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What is Open Finance (and why should you care)?

Open Finance is the evolution of Open Banking. It moves beyond just bank transaction data and into broader financial data across mortgages, SME finance, payroll, tax records, credit bureaus, investments and more.

At its core, Open Finance is an ecosystem built on:

• Secure APIs

• Standardised data sharing

• Explicit customer consent and trust

• Interoperability across institutions

• Regulatory guardrails

The fundamental goal of Open Finance is consent-based data sharing that enables better decisions, fairer outcomes, and less friction. Open Finance is not about compliance checkboxes, it's about designing with a greater focus on customers, inclusivity and trust.

It’s about:

• Unlocking forward-looking insights

• Reducing friction for customers

• Making risk smarter (not harsher)

• Building trust through transparency

If we get it right, the outcomes would be:

• Customers get better products

• Lenders get better risk visibility

• Brokers waste less time

• The UK strengthens its position as a global leader

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At Sorai, we focus on bringing a deep understanding of customers and combining that with business, product and operations discovery and implementation.

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Friction points

Starting with statistics can often be a great way understand why Open Finance is hugely transformational for the industry as a whole.

66% of SME businesses in the UK don’t have credit, and research shows that 44% drop out due to paperwork. For those who go through the pain of consolidating their data via necessary paperwork spend approximately 4 hours on this -that's a significant opportunity cost!

Open Finance has an opportunity to reduce this systemic friction. It is the strategic, operational and product rethink opportunity.

1. Data gathering is the biggest friction point across all journeys

• At present, SMEs and mortgage customers are repeatedly asked for the same information by different parties — brokers, lenders and underwriters.

• This gets more challenging for businesses that are new, have a thin file and minimal trade history to show.

• The data is often captured throughout the journey, which means that brokers, and customers have to go back and forth, leading to significant delays and drop-offs

• The population at large lacks financial literacy and an understanding of how to become creditworthy. In addition, risk and underwriting processes look at past history to make decisions rather than assess future potential.

The opportunity here is consolidation and portability.

A reusable, consent-based “passport” model dramatically reduces duplication and builds trust progressively rather than restarting credibility at every application. With Open Finance, we should utilise data to improve decision making, reduce friction, improve fraud and crime check processes - thereby making fair and predicitive decisions on the potential of a business. This is the best way to provide fair, smooth and inclusive access to financial products.

2. We look backwards to make decisions

This was one of the most powerful shifts discussed through the day.

Most underwriting models focus on historical data, struggle with early-stage volatility, and penalise lack of history, but SMEs need forward-looking support.

“Looking forward is essential which is why Open Finance is so transformational. Its not about past performance and but unlocking potential. We need to stop treating risk as: "What could go wrong?” And start treating it as: “What is the likely trajectory?"

Chair, Open Finance Association

Forward-looking signals matter:

• Cash flow consistency

• Network relationships

• Behavioural credit patterns

• Usage of funds

• Industry trends

While this may seem like a stretch, it is key to note that Open Finance solutions are already being developed and launched in the market by start-ups - solutions that are enabling real-time data sharing, forward-looking risk modelling, consent-based financial passports, and AI-driven affordability assessments. The shift from static underwriting to dynamic monitoring is not theoretical; it is already being tested through digital sandboxes, embedded finance platforms and self-learning decision engines that give lenders greater visibility and customers greater control.

Smarter Contracts is a start-up that enables a single data consolidation platform.

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3. Most lenders don't understand the business they are lending to

Expertise matters - know the business you are supporting and even better know the sector. This is a big pain point for businesses especially those with a thin-file.

Many SMEs feel lenders don’t understand their business leading to an immediate disconnect. The relationship becomes transactional - knowing the business and the sector is a point of distinction.

Open Finance can help here — but only if data is interpreted with domain intelligence.

Raw data is not insight. Sector-aware analytics + behavioural signals + contextual understanding is going to enable your business to develop differentiated lending.

4. Data flows and customer journeys are not often developed cohesively

Too often, organisations optimise for internal workflow rather than customer experience.

If you work in SME finance:

• Design from the SME journey, not the lender workflow

• Think multi-value outputs from one data capture

• Focus on reducing repeated data requests

• Shift from risk avoidance to progressive trust building

Open Finance cannot just be a backend API initiative. It must reshape the journey end-to-end.

5. Policy doesn't match innovation

   
   

The FCA has been increasingly vocal about integrating innovation and policy. Through sandboxes, tech sprints and direct engagement - regulatory frameworks are being shaped in parallel with product experimentation.

This is significant because policy is no longer a post-build checkpoint. It is becoming part of the design loop, where the iterative feedback is going to provide the signals to check if the policy is in fact enabling the adoption of Open Finance.

For firms, this means:

• Building governance into product architecture early

• Designing consent mechanisms that are robust, not cosmetic

• Testing real-world impact before scaling

• Aligning Open Finance initiatives with Consumer Duty outcomes

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AI will change Mortgages & LendinG, radically

Fifty-nine percent of brokers spend 5–10 hours a week on paperwork, and 41% spend 11–14 hours a week!

The mortgage process today is still document-heavy, repetitive and overly manual. Brokers and lenders are spending significant time consolidating data that already exists somewhere digitally. But this is changing fast, and with AI-enabled tools we can start to see a greater degree of optimisaton:

• Pre-populating affordability checks

• Averaging expenses over 12 months

• Excluding anomalies

• Running live collaboration uploads

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Want to understand how an AI model could help improve your mortgage journey? Reach out to us for a live demo of our AI Sandbox.

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“Most underwriting won’t exist in 3–5 years.”

Founder, Curvestone AI

With the maturity and the accelerated penetration of AI agents and tools, in the next year one can expect agents to:

• Analyse payroll

• Cross-reference HMRC

• Test cashflow certainty

• Run multiple lender scenarios instantly

While the efficiency gains are obvious, it alone does not create confidence - Trust does. How do we create greater certainty for mortgage decision making where customers are in control of their data and how is it going to be used?

Confidence for a lender comes down to the following:

1. Clarity of data

2. Predictability of behaviour

3. Confidence in governance

4. Data is real-time and verified

5. Income and expenditure patterns are stabilised over time (not based on one anomalous month)

6. Behavioural signals are visible

7. Usage of funds can be monitored post-loan

Confidence for customers grows when:

1. They understand what is being assessed

2. They can see how decisions are made

3. They can control who sees their data

4. They feel the process is fair

Open Finance provides better-structured, consented, forward-looking data.

Advanced consent mechanisms and provide visibility on data usage as well as the customers's ability to withdraw consent.

Without this, Open Finance risks repeating Open Banking’s adoption challenges.

Moxim is a UK based start-up that focuses on forward decision making with AI

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How to get started

The best practice process is always customer backed. This was evident across all discussions at the tech sprint and this is the process we follow at Sorai across engagements.

1. Understand not just segmentation data but behaviours across your customer groups

Get very close to what customers and people want. You'll often find that the journey for an early business looks a lot like a consumer business. Map the journey before determining your architecture and product solution, with a focus on the following:

• Behaviours, decision drivers, needs and expectation. This informs your experience layer

• Determine where the friction sits, where duplication happens. This informs experience, operations and product

• Join this with what your internal teams need, expect, what drives their behaviours and decisions

• Most importantly map out the data flows in your journeys

A consolidated view of experience, data and operations should help understand how to design for trust.

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Book a discovery session to understand how we map customer journeys for Mortgages and Lending with a focus de-risking solutions

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2. Consent is the engine

A good exam question to start with is: How do consent based tools help SMEs better understand and share their data? When consent is clear, data quality improves. When data quality improves, risk confidence increases.

Customers want ownership, not just faster decisions!

Consent is

• A design principle

• A transparency mechanism

• A behavioural trust builder

Customers must understand:

• What is being shared

• Why it is being shared

• What outcome it drives

• How to revoke it

  
  

3. Front-load the data, simplify the journey

Most solutions from the event at the FCA led with this approach - front load the data and therefore reduce the fragmentation of data request throughout the journey.

Gather information once and use multiple times.

This consolidated, structured data model that:

• Reduces repeated inputs

• Works across lenders and enables leaders greater cross-sell opportunities

• Surfaces predictive insights

• Connects to affordability and behavioural risk

• Reduces friction and improves consistency

4. Design for trust and robustness

When designing for trust, your AI models and systems need to be robust and transparent. From a regulatory standpoint consider the below when developing your strategy and solutions:

• Explainable AI

• Clear governance

• Strong API security

• Interoperability standards

• Bias monitoring

5. Create a financially inclusive balance

The imbalance today is simple — the lender knows more about the borrower than the borrower knows about themselves. When only the lender has full visibility of credit bureau data, behavioural patterns and affordability assessments, the system naturally tilts in one direction. A financially inclusive model requires rebalancing that equation so SMEs and consumers can access, understand and act on their own financial data — not just be assessed by it.

If SMEs and consumers understand their credit worthiness, receive predictive warnings about future cash stress, see behavioural insights about payment patterns, and know what improves or weakens their profile, they become more resilient. Enable SMEs to understand their own credit worthiness, make them more resilient. Confidence in lending is not just about mitigating downside risk — it’s about enabling better behaviour. Putting the right product at the right time in front of the customer in the journey will reduce bad behaviour (like not making a payment) - that is proactive lending.

This was a recurring theme. Consumers and SMEs want to know if they’re getting the best deal, want visibility of options, want to understand what overpayments do, want to access their own credit data, and want education alongside automation. Today, 80% of customers stick with the same lender just to avoid duplication. That’s not loyalty, that’s friction avoidance. If Open Finance simply accelerates approval without empowering customers, we’ve missed the point. Open Finance must empower customers with better financial literacy, behavioural insights, predictive warnings (future cash stress), and decision support tools — not just approval pipelines.

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solutions to develop in the next two years

Financial Institutions will look to turn data into a portable asset

Imagine an SME having a portable, consent-based data wallet/platform that securely holds payroll, bank data, HMRC records, invoices and credit behaviour — all structured, reusable and sharable. Instead of repeatedly hearing, “Fill this form and we’ll get back to you,” the interaction becomes: “Here’s my verified business profile. Assess me.” That shift alone transforms the power dynamic. The business is no longer scrambling to gather documents; it is presenting a structured, trusted financial identity.

The impact is significant. It reduces repeated data input, lowers friction for brokers, and builds trust progressively over time rather than restarting credibility at every application. It also creates multi-use value from one dataset — the same verified profile can support lending, insurance, supplier negotiations or investment conversations. For lenders, confidence increases because the data is consented, standardised and up to date. For SMEs, ownership increases because they control who accesses what — and can withdraw that consent at any time. This is not just operational efficiency; it is a structural redesign of how financial trust is built.

Trust frameworks will define the winners

Technology alone will not determine success in Open Finance — trust frameworks will.

Designing for trust means embedding bias mitigation, sustainability, inclusive access and fair decision-making into the architecture from the start. It means aligning Open Finance initiatives with Consumer Duty outcomes, not just commercial gain. A strong trust framework ensures data is used proportionately, transparently and securely — and that accountability is clear when automated systems make decisions. When done well, Consumer Duty + Open Finance becomes a force multiplier: better products, better outcomes, less crime, less fraud and more inclusion. This requires deliberate governance, shared standards and a commitment to balancing innovation with responsibility.

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WHAT DOES THIS MEAN FOR YOUR BUSINESS

Open Finance is no longer a future-state conversation — with dynamic monitoring over static underwriting, consent-driven data consolidation over fragmented forms, predictive insight over backward-looking assessment, and trust frameworks that balance automation with accountability. The FCA is accelerating this further by combining policy and innovation to facilitate its rollout in a practical, outcomes-led way.

But this shift will not wait for slow movers. Lenders and financial institutions that act now — iterating alongside regulators, embedding governance early, and redesigning journeys around transparency and inclusion will define the next decade of financial services. Those that hesitate risk being left behind in a market that is rapidly standardising around openness and interoperability.

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ABOUT THE AUTHOR(S)

Niharika Hariharan is a partner at Sorai and leads the Financial Sector practice.

Anish Joshi is a partner at Sorai leading innovation and AI across sectors. Sorai brings expertise of working globally with financial services institutions, with a focus on strategy, product and customer experience and technical implementation.

All our articles are written by experts, and not generated with AI.

Reach out to us, if you'd like to start developing practical approach to leveraging Open Finance.

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