The Interoperability of Financial Data

59 Pages Posted: 10 Mar 2025

See all articles by Elif Cansu Akoguz

Elif Cansu Akoguz

KU Leuven - Faculty of Business and Economics (FEB)

Tarik Roukny

KU Leuven - Faculty of Business and Economics (FEB); affiliation not provided to SSRN

Tamas Vadasz

KU Leuven - Faculty of Business and Economics (FEB)

Date Written: March 07, 2025

Abstract

This paper studies how data interoperability-third-party direct access to customers' financial information-affects competition and welfare in the finance sector. Our model reveals a trade-off: while sharing customer data improves competition in information intensive services like credit, it may increase prices of data-generating services like payments. We show that targeted datasharing regimes (e.g., Open Banking) preserve the ability of banks to extract surplus by shifting market power from credit to payment markets. Although some firms benefit in aggregate from increased competition, others are left worse off by changes in prices. Wider-reaching data-sharing initiatives (e.g., Open Finance) further level the playing field and diminish banks' capacity to monetize their data, reallocating surplus toward firms and alternative lenders. Our findings underscore the need to account for cross-market spillovers when designing policies that regulate access to financial data.

Keywords: Data sharing, Banking, FinTech, Credit, Payment, Information spillovers

JEL Classification: G21, G23, G28, G32, D82, D83, L51, O33

Suggested Citation

Akoguz, Elif Cansu and Roukny, Tarik and Vadasz, Tamas, The Interoperability of Financial Data (March 07, 2025). Available at SSRN: https://ssrn.com/abstract=5169568 or http://dx.doi.org/10.2139/ssrn.5169568

Elif Cansu Akoguz

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Tarik Roukny (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

affiliation not provided to SSRN

Tamas Vadasz

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
122
Abstract Views
386
Rank
492,304
PlumX Metrics