Original text here from Patrice Bernard (LinkedIn)
Ever since the initial proposals to mandate data openness, financial institutions have been loudly protesting. Their main fear is the potential competition from web giants, and they decry the imbalance caused by not having similar obligations imposed on these potential rivals. The British regulator has started a consultation to objectively assess these complaints.
On the surface, the grievances of these companies appear valid: why should they hand over their rich customer data to potential competitors, who themselves have in-depth insights into their daily activities but aren't subject to similar rules? However, upon closer examination, one might question whether these complaints are truly justified or merely a smokescreen.
The FCA is now seeking to hear both sides before forming a final opinion, which could lead to compensatory measures. The time for baseless accusations is over; the institutions must now prove how the data asymmetry they complain about gives an unfair advantage to their adversaries, potentially granting them excessive market power. This task may prove more complex than the complainers anticipate.
So far, there's no clear evidence that the targeted entities, through their numerous financial initiatives, have gained particular benefit from the open banking opportunities, especially compared to other users. Their own resources seem sufficient for their needs, indirectly confirmed by their rivals who argue these resources are worth sharing.
The authority isn’t easily fooled and has cunningly asked these financial institutions to explain how access to Big Tech platform data would help them improve their services. Yet, it stops short of questioning their actual capability to implement the cited examples, which must be considered in light of the substantial progress still needed in internal data processing.
Furthermore, the fundamental issue isn't addressed in this call for contributions. The focus on data asymmetry might be a mistake since it's merely a byproduct of an inherent asymmetry of roles: banks act as transaction mediators, while tech firms provide end services. Therefore, the nature of the data they handle differs, and so should the governing rules.
As the EU slowly moves towards adopting open banking standards similar to PSD2 (which major groups have heavily criticized and failed to capitalize on, leaving room for more agile and visionary players), the developments in this area across the Atlantic are worth following. Regardless of the outcomes, this initiative should serve as an inspiration for regulators in Europe and beyond.
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