Data, Innovation and Transatlantic Competition in Finance: The Case of the Access to Account Rule

Abstract

Technological innovation is transforming the structure of the retail banking sector. Traditional business models are facing a rapid disruption process led by the emergence of FinTech companies which provide innovative digitally-enabled banking and financial services. In order to offer payment initiation services and account information services, third party providers need to access customer accounts, since information on the availability of funds on the consumer’s payment account is a key element. The paper focuses on two major trends that underpin this new business environment, which is known as Open Banking. First, the EU has taken the lead in the transition by providing, within the revised Payment Service Directive (PSD2), a sector-specific portability regime (the access to account rule) expressly aimed at fostering competition. Indeed, one of the key points of the PSD2 is that new market players should be granted access to account data. Second, in such a context standardization plays a crucial role with regards to the implementation process and the overall effectiveness of this new pro-competitive mechanism. Regulators in other countries have recently expressed interest in developing frameworks that put consumers in control of their account data. Additionally, they have encouraged standardization initiatives aimed at defining shared, open application programming interfaces (APIs). Will regulators in the U.S. follow suit?