Beyond Banking: Embedded Finance, Open Banking and the ESG Data Gap
By Piotr Glapiński, Attorney at law, Senior Counsel at Dudkowiak & Putyra
Distribution Is Changing Faster Than the Data Behind Sustainability Claims
For decades, a bank was a place customers went to. Increasingly, it comes to them, often under another company's brand: credit appears at an online checkout, insurance is sold alongside a purchase, and licensed third parties can read payment account data. Banks are also expected to show that the money they lend and invest supports the low-carbon transition. Both shifts depend on reliable data. On sustainability, that data remains the weakest link.
customer deals with the retailer or platform, while the licensed institution that provides the capital and the regulatory permission stays in the background.
Banks now compete on how easily their products fit into someone else's customer journey. Regulatory responsibility, however, does not disappear along with the product's visibility, if anything, it widens. Under the revised Consumer Credit Directive (EU) 2023/2225, buy now, pay later (BNPL) schemes in which a third-party lender finances the purchase generally fall within consumer credit rules, including a mandatory creditworthiness assessment, and the retailer or platform presenting the offer can itself be classed as a credit intermediary, with its own disclosure obligations and, subject to national exemptions, registration requirements. Member States are required to apply the new rules from 20 November 2026, although Poland has yet to finalise its implementing legislation. A product designed to be invisible still has to meet very visible standards.
Open Banking Laid the Foundations
Much of this integration rests on open banking. Since PSD2 became applicable in 2018, banks and other account-servicing payment service providers in the EU have had to give authorised third-party providers access to customers' payment accounts, with the customer's consent and, in practice, mainly through APIs.
In November 2025, EU institutions reached a provisional political agreement on PSD3 and a new Payment Services Regulation. The package would move conduct rules, including open banking obligations, into a directly applicable regulation and make them easier to enforce, but it is not yet in force. The broader move to open finance under the proposed Financial Data Access Regulation (FiDA) is still under negotiation.
ESG Moves Into the Product
If open banking is changing how financial services reach customers, ESG integration is changing what they are meant to achieve. Green mortgages offer better terms for energy-efficient homes. Sustainability-linked loans tie the margin a company pays to agreed sustainability performance targets, often including emissions reductions. Investment portfolios are screened against ESG criteria.
For banks, the activities they finance tend to matter far more than their own operations: financed emissions reported to CDP in 2022 were on average around 750 times operational emissions. Building ESG criteria into risk assessment and pricing lets banks steer capital towards lower-emission activities and away from carbon-intensive ones. That lever works only if the targets are meaningful and the results can be measured. A loan with undemanding targets, or a green label resting on unverified assumptions, creates reputational and legal risk instead of impact.
Measurement Is the Weak Point
Under the GHG Protocol, banks generally account for financed emissions in Scope 3, Category 15 (investments). That requires data from a wide range of borrowers, many of which do not measure their emissions at all. The PCAF Standard, a leading methodology in this field, scores data quality from 1 (highest quality) to 5 (lowest quality), with lower-quality scores often reflecting estimates based on sector averages rather than verified, borrower-specific data.
EU simplification will not make this easier. Under the Omnibus I Directive (EU) 2026/470, mandatory CSRD reporting will be limited to companies with more than 1,000 employees and more than €450 million in net turnover from the 2027 financial year. Many mid-sized clients will no longer be required to produce standardised ESRS data, so banks are likely to rely more on the voluntary VSME standard and on estimates.
Technology Helps, if It Shows Its Limits
Technology can narrow the gap, but it cannot close it alone. AI and machine-learning tools are being used more widely to extract and standardise ESG information from reports, questionnaires and certificates. Their output remains dependent on the underlying data quality; estimates should be identified and validated accordingly.
Blockchain can provide a tamper-evident record of carbon credits or supply-chain transactions, but it cannot confirm that the data entered was accurate; that still requires audit and assurance. The same applies to ESG data providers and fintechs: their value depends on whether users can see how each figure was produced.
Transparency Is the Real Differentiator
Embedded finance places financial services inside other companies' products, open banking connects them, and ESG integration redefines what they are expected to achieve. All three depend on data that banks do not fully control.
The institutions best placed to benefit will be those that can show how their figures were calculated, where estimates were used and how data quality is improving over time. As mandatory corporate disclosure narrows, that openness becomes a competitive advantage in its own right. It is also becoming an essential part of demonstrating credible, real-world impact.
