Consumer Inertia and Competition-Sensitive Data Governance: The Case of Open Banking

Abstract

The issue of consumer disengagement has troubled regulators and policy makers for years, since it undermines the functioning of sound competitive markets by allowing incumbents to enjoy economic supracompetive returns to the detriment of innovation and consumer welfare. The market investigation into the banking industry launched by the UK Competition and Market Authority (CMA) represents an original attempt to tackle the problem through antitrust enforcement. By building on the access-to-account rule enshrined within the European regulatory framework of the revised Payment Service Directive and the most recent developments of FinTech innovation, the CMA has designed a set of measures aimed at addressing some of the structural features causing adverse effects on competition in the retail markets, ultimately paving the way towards Open Banking. The paper highlights the rationales, benefits and potential drawbacks of the UK Open Banking plan, investigating if this regulatory intervention can act as a blueprint for harnessing the competitive potential of data-driven innovation of the financial industry and the digital economy as a whole.