The European Association of Co-operative Banks (EACB) welcomes the possibility to contribute to the discussion on open finance. We appreciate the European Commission’s effort to create a more integrated and functional digital single market through the data strategy. We support the Commission’s general principle of facilitating the sharing of data. Sharing should be based on free choice of private individuals and businesses, voluntary and on a contractual basis.
In its thinking of an open finance framework, we recommend the Commission to factor in the following aspects:
1. Co-operative banks consider that the experience with the second Payment Services Directive (PSD2) holds valuable lessons such as:
- For a data sharing economy to be successful, it needs the right incentives. It needs to allow all parties in the chain to derive benefits, for both customers and businesses. For retail and corporate customers, more tailored products, greater personalisation of services, better customer experience, developments of new digital tools and for businesses to develop and train AI systems that can be used to automate and improve existing processes. Sharing will increase the knowledge banks hold on their customers so they can better delivery on customers’ expectations, foster a sound digital transformation, improve certain processes by pooling efforts (AML/KYC), and build a sustainable business model so as to create incentives to foster innovation.
There are limits to what a legislative approach can achieve. The PSD objective to open bank infrastructures and data to non-banks required a multilevel legislation (level 1 to set high-level objectives, level 2 to define RTSs) with additional discussions between stakeholders and several guidelines and opinions were necessary to guide the market.
- Benefits must be measured against costs. All efforts put in place by market participants to facilitate AIS services have not generated much demand. On the contrary, API usage in most countries is rather low.
2. The risks versus the benefits of data access should be considered. We strongly believe that a careful risk assessment should be done to estimate whether the benefits are greater than the risks for the various actors in the ecosystem. Risks such as financial exclusion, data protection, misuse of data, fraud, insufficient security measures, ID theft and misleading advice should be factored in both from costumers’ and companies’ perspectives. An open saving/insurance/investment framework shouldn’t lead to consumers losing control over data, and the banking and financial sector facing unintentional administration, development and legal uncertainty. We believe that the assessment for setting up an open finance framework for accessing and sharing of customer data should especially include a market analysis that proves the actual existence of a viable ‘secondary market’ benefitting from data sharing.
3. Data sharing from other parties towards the financial sector should also be strongly considered. The assumption seems to be that open finance should be about the financial sector again opening up its data to other parties. However, we believe that data usage, access and sharing should be considered in a broad context, with a focus on cross-sectoral data sharing between all sectors of society. There are several use cases in which the financial sector would benefit from data shared by for example public bodies and other types of companies.
4. The European principles of a market economy, with freedom of contract to allow for sustainable business models to be developed and a level playing field for all economic actors that is fair for all participants.