Open Finance risk: Five things that happened in May that you need to know about

§ 01 Executive Snapshot

• What: A summary of significant developments in Open Finance risk management during May 2026.
• Who: Key players include the US government, New York lawmakers, UK government, Financial Conduct Authority, and Invela.
• Why it matters: The developments highlight the urgency and complexities of regulatory frameworks surrounding fintech and Open Finance, impacting risk management strategies.

§ 02 Key Developments

• The US Executive Order aims to streamline fintech rules but requires a new Section 1033 proposal from the CFPB and clarity on third-party risk management.
• New York advanced state-level financial data access bills modeled after the CFPB’s 1033 rule, indicating proactive state-level regulation.
• The UK’s Smart Data 2035 Strategy targets five or more active Smart Data schemes by 2030, prioritizing Open Finance as a sector.
• The Financial Conduct Authority’s evaluation of Open Banking Future Entity candidates concluded, with Open Banking Limited selected as the winner.
• The European Commission is processing PSD3 and the Data (Use & Access) Act, but compliance and risk management are still misaligned in the Open Finance framework.

§ 03 Strategic Context

• Historical relevance includes the slow development of federal regulations in the US, prompting states to take initiative in establishing their own frameworks, reflecting a shift towards localized governance in financial data access.
• The broader narrative involves the tension between regulatory compliance and actual risk management in Open Finance, emphasizing the need for robust infrastructure to mitigate risks posed by multiple intermediaries.

§ 04 Strategic Implications

• Immediate market consequences include the potential for fragmented regulatory environments as states implement their own rules, affecting fintech operations and compliance strategies.
• Long-term implications could lead to innovations in risk management infrastructure, as firms that build adequate controls will be better positioned to adapt to evolving regulatory demands and market conditions.

§ 05 Risks & Constraints

• Potential risk includes the lack of unified regulatory oversight, leaving gaps in risk management as multiple parties are involved in Open Finance data flows.
• Another risk is the dependence on existing infrastructure that may not support the necessary real-time monitoring and risk assessment required for effective Open Finance operations.

§ 06 Watchlist / Forward Signals

• Watch for the implementation timelines of New York's financial data access regime and the federal responses to the Executive Order.
• Future developments signaling success or failure include the establishment of reliable risk management frameworks and the operational readiness of the Smart Data schemes by 2030.