Customer Data Access and Fintech Entry: Early Evidence from Open Banking

74 Pages Posted: 8 Apr 2022 Last revised: 22 Apr 2022

See all articles by Tania Babina

Tania Babina

Columbia University - Columbia Business School, Finance

Greg Buchak

Stanford University Graduate School of Business

Will Gornall

University of British Columbia (UBC) - Sauder School of Business

Date Written: March 31, 2022

Abstract

Open banking is the trend of empowering customers to share their banking data with fintechs and other banks. We compile a novel dataset documenting that governments in 49 countries have implemented open banking policies and 31 more are in active discussions. Following adoption, fintech venture capital investment increases by 50%, with more comprehensive policies showing larger effects. We examine the policy tradeoffs with a quantitative model of consumer data production and usage. Our calibrations show that customer-directed data sharing increases entry by improving entrant screening ability and product offerings, but harms some customers and can reduce ex-ante information production.

Keywords: Open banking, entrepreneurship, fintech, financial innovation, data access, data rights, data portability, Big Data, financial regulation, financial sector, banks

JEL Classification: G21, G28

Suggested Citation

Babina, Tania and Buchak, Greg and Gornall, Will, Customer Data Access and Fintech Entry: Early Evidence from Open Banking (March 31, 2022). Available at SSRN: https://ssrn.com/abstract=4071214 or http://dx.doi.org/10.2139/ssrn.4071214

Tania Babina (Contact Author)

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States

Greg Buchak

Stanford University Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
6507214004 (Phone)
94305 (Fax)

Will Gornall

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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