Open Banking and Customer Data Sharing: Implications for Fintech Borrowers

Open banking: an early review

“…Therefore, both theoretical frameworks that address these new dynamics and empirical research that provides evidence from the real-world implementation of open banking are essential for a comprehensive understanding of its impact. Second, while initial empirical studies by Fang and Zhu (2023), Nam (2023) and Babina et al. (2024a, b) have started to explore the implications of open banking, echoing the theoretical insights of He et al .…”

“…Djankov et al (2007) present evidence supporting the effectiveness of public credit registries in poor French legal origin countries. Conversely, as highlighted by Babina et al (2024a, b) and Nam (2023), significant differences exist between credit registries and open banking: (1) open banking provides a broader spectrum of information; (2) it offers customers the autonomy to choose whether to share their data, along with easier access to their information and (3) it extends the utility of data beyond lending to encompass a wider range of applications. These distinctions amplify the privacy concerns associated with open banking (See, e.g.…”

“…Therefore, both theoretical frameworks that address these new dynamics and empirical research that provides evidence from the real-world implementation of open banking are essential for a comprehensive understanding of its impact. Second, while initial empirical studies by Fang and Zhu (2023), Nam (2023) and Babina et al (2024a, b) Lastly, the importance of consumer education in the context of open banking cannot be overstated. As financial ecosystems evolve to become more interconnected and data-driven, consumers stand at the crossroads of innovation and vulnerability.…”

“…Notably, their findings also suggest that open banking aids SMEs informing new relationships with fintech lenders. Complementarily, Nam (2023) uses loan data from a leading German fintech lender to show that open banking and data sharing contribute to more efficient credit allocation and the mitigation of adverse selection.…”

Bank Competition and Household Privacy in a Digital Payment Monopoly

“…128 Data portability policies (such as requirements for banks to release depositor data to households, if requested, allowing households to take their data to other lenders) have been implemented in various countries (OECD, 2023) and have been investigated theoretically and empirically in several recent papers (Babina et al, 2022;Brunnermeier and Payne, 2022;He et al, 2023;Nam, 2022). 7) by ') compares ( 48) to the probability of household revelation that emerges from the equilibrium found in Proposition 1 and which applies to the equilibrium of the quadratic extension (Appendix B.3) that is our point of comparison here.…”