"Building Open Finance: From Policy to Infrastructure"
Douglas Arner, Ross Buckley, Christine Wang, and Dirk Zetzsche
Notre Dame Journal of International & Comparative Law
Volume 15, Issue 1 (2025)
Published online: June 2025
Abstract: As one of the most digitalized sectors of the economy, finance is increasingly dependent on data. Over the past decade, the implementation of Open Banking and Open Finance in an increasing number of major jurisdictions around the world, including the European Union (EU), the United Kingdom (UK), Australia, Brazil, and the United Arab Emirates (UAE), seeks to break down data silos, empower consumers, and increase competition among financial service providers, aiming to maximize the value of financial data for innovation, growth, and competitiveness. In addition to mandatory requirements, other governance approaches to Open Finance, including collaborative arrangements and voluntary initiatives, are emerging. For example, Singapore and Hong Kong are actively supporting the development of Open Finance through collaboration between regulators and industry, while both China and India are seeking to develop new approaches to making data available to support development, innovation, and competitiveness. In the United States (US), industry associations have promoted Open Finance practices, and a new mandatory rule from the Consumer Financial Protection Bureau (CFPB) on personal financial data rights is currently pending.
There are complex problems in the interaction between financial regulation and data governance in Open Finance. Customer data shared through an Open Finance system is both subject to financial regulatory requirements, such as rules governing the collection, processing, and use of financial data, and to the general governance framework for data protection. Furthermore, Open Finance initiatives adopted by different jurisdictions affect information sharing in domestic financial markets and in the cross-border transfer of financial data. The trend towards data localization and the asymmetry of data sharing leads to an unlevel playing field between market players, thereby exacerbating the problem of regulatory fragmentation in Open Finance regimes. Given the evolving nature of digital finance and the complexity of integrating data into its process, the main challenge is to develop appropriate governance approaches that can maximize the benefits of data sharing while mitigating new cross-cutting challenges in finance and data regulation.
Based on an analysis of experiences to date in leading jurisdictions, we synthesize a range of policy strategies to address the complex interplay of financial regulation and data governance inherent in building Open Finance. These hold important lessons also for the US as it moves forward. The multi-disciplinary nature of Open Finance requires coordination between regulators and industry to ensure policy coherence and technical interoperability. Where financial and data regulatory regimes intersect, it is important to establish a collaborative forum and/or provide general guidance to facilitate a better understanding of Open Finance governance and improve consistency in regulatory action across sectors. In response to the increasing digitalization of the economy, there is also the need to expand the scope of data sharing from the financial sector to other industries, and thus move towards a broader Open Data framework.
No comments:
Post a Comment