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

103 Pages Posted: 8 Apr 2022 Last revised: 22 Jan 2024

See all articles by Tania Babina

Tania Babina

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Saleem Bahaj

Bank of England

Greg Buchak

Stanford University Graduate School of Business

Filippo De Marco

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; CEPR Financial Economics

Angus Foulis

Bank of England

Will Gornall

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

Francesco Mazzola

ESCP Business School

Tong Yu

Imperial College London

Multiple version iconThere are 3 versions of this paper

Date Written: September 7, 2023

Abstract

Open banking (OB) empowers bank customers to share transaction data with fintechs and other banks. 49 countries have adopted OB policies. Consumer trust in fintechs predicts OB policy adoption and adoption spurs investment in fintechs. UK microdata shows that OB enables: i) consumers to access both financial advice and credit; ii) SMEs to establish new fintech lending relationships. In a calibrated model, OB universally improves welfare through entry and product improvements when used for advice. When used for credit, OB promotes entry and competition by reducing adverse selection, but higher prices for costlier or privacy-conscious consumers partially offset these benefits.

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

JEL Classification: G21, G23, G28, G24, G50, K21, L10, L51, O31, O36, O50, O38

Suggested Citation

Babina, Tania and Bahaj, Saleem and Buchak, Greg and De Marco, Filippo and Foulis, Angus and Gornall, Will and Mazzola, Francesco and Yu, Tong, Customer Data Access and Fintech Entry: Early Evidence from Open Banking (September 7, 2023). Stanford University Graduate School of Business Research Paper , 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

HOME PAGE: http://TaniaBabina.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://taniababina.com

Saleem Bahaj

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Greg Buchak

Stanford University Graduate School of Business ( email )

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

Filippo De Marco

Bocconi University - Department of Finance ( email )

Department of Finance
Via Roentgen 1
Milano, MI 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

CEPR Financial Economics ( email )

London
United Kingdom

Angus Foulis

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Will Gornall

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

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

HOME PAGE: http://willgornall.com

Francesco Mazzola

ESCP Business School ( email )

Corso Unione Sovietica 218bis
Torino, 10134
Italy

Tong Yu

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

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