FPF Report: Developments in Open Banking, Key Issues from a Global Perspective

Authors: Hunter Dorwart, Daniel Berrick, Lee Matheson, and Dale Rappaneau

Dale Rappaneau was a former FPF Policy Intern.

In FPF’s report, Developments in Open Banking, Key Issues from a Global Perspective, explores how ten different jurisdictions have approached open banking regulation, including questions related to privacy and data protection. The report was developed as part of the joint open banking conference FPF co-hosted with the OECD in March 2022.

Mobile peer-to-peer payments are now ubiquitous. These and other services do or will exist and are part of a large trend called “open banking.” Policymakers across the world have leveraged open banking tools to accomplish a wide range of goals, from promoting competition in the banking sector to facilitating innovation in financial technology services. Open banking tools, when implemented, may allow users to import account data into a tax return easily or to link and aggregate all their accounts for clear financial planning.

Efforts to realize open banking’s benefits must navigate the complex market and regulatory factors. At the heart of open banking lies the sharing of personal information, which creates a plethora of data protection and security risks. If unaddressed, these risks may inadvertently hinder open banking policies or implementation, create tension between different legal obligations, or result in harm to vulnerable individuals and organizations. As governments grapple with such challenges, the implementation of open banking frameworks remains a daunting task that could create significant costs and burdens for businesses and governments across the world.

FPF’s report explores the key similarities and differences between the ten identified jurisdictions across several topics. Each topic represents a fundamental component of open banking in these jurisdictions around the world and includes:

1. A definition of “open banking.”
2. The three general approaches to open banking regulation
3. What entities, services, and categories of data do regulations cover?
4. Variations in regulatory power and technical specification
5. Open banking’s interaction with data protection and privacy law

The FPF hopes that this report will help stakeholders better understand the key issues that generate confusion and hinder open banking practices, therefore providing the impetus for solutions.