Today, 28 June, the EU published two proposals relating to financial data and open finance. Why is this important? Let’s dig into it. 

Open banking is the future of banking, making markets more efficient by allowing consumers to switch in an instant to the provider that offers them the best deal. And we have seen the benefits for EU consumers of easy switching in other sectors (like telecom or energy), why hasn't it been possible in banking?

A customer centric Open Finance model would enable customers to control their data and who they allow access to. It should force financial service providers to compete for customers by delivering value, not by locking in data, which drives down costs for all. It should enable data mobility, free of charge and easily done, to become available for use to break the dominance of the traditional players and allow new innovation for the benefit of consumers.

This was the promise of PSD2 back in 2017. And while PSD2 has certainly resulted in more secure payments, it has signally failed to deliver on the original promise of a truly open financial data market. This is because traditional banks have constantly made excuses and evaded the spirit of the regulation rather than do what’s best for their customers.

Poor and inconsistent implementation

Klarna sees this in our role as a financial institutions aggregator, connecting innovative fintechs to the financial accounts of 15,000 banks worldwide using open banking standards, most of them PSD2. 

Four years since PSD2 APIs became available, we still face multiple obstacles: poor or limited data access, cumbersome, subpar and unmodifiable customer journeys, IBAN discrimination (France) and unexpected payment rejections. This limits the user experience of innovative fintechs, restricts innovation, cuts competition and leads to bad outcomes for customers. Traditional banks are effectively locking out innovative new players, and locking in consumers, without having to keep up with innovative, cheaper, and better solutions.

It is good to see the Commission address these issues around implementation and propose stronger enforcement to ensure compliance with PSD2 and its regulations as convenience and trust drive fintech adoption. 

An opportunity to get it right 

With the PSD2 reboot and the proposed regulation for a Financial Data Access Framework, the European Union has a huge opportunity to redesign a regulatory environment that enables local fintechs to compete, innovate, and deliver maximum value for European consumers.

However, the EU must not succumb to big bank lobbying. The proposal announced today to allow banks to charge for access to their customer’s data looks very much like the EU has prioritised pleasing big banks over putting consumers' best interests at heart. 

It is essential that consumers have control over their personal data, as it belongs to them and should not be exploited for monetary gain. The Financial Data Access Proposal's provision allowing banks to charge for accessing consumer data raises serious concerns about who really owns the data, if banks are allowed to ‘be compensated’ for providing access to it. Data should not be a commodity that is monetized by big banks; it should be treated with the utmost respect and transparency. If financial data is to be truly open then it must also be free to access. This is, after all, the customer’s data, not the banks’.  

We advocate for data mobility, free of charge and easily done, becoming readily available for all consumers. We believe this should be the core of the revision, enabling much needed new and innovative services to deliver the best outcomes for consumers and society, and bringing healthy competition to traditional banks in Europe.