The new paper from the European banking industry, produced by the European Banking Federation (EBF), European Association of Co-operative Banks (EACB) and the European Savings and Retail Banking Group (ESBG) sets out the industry’s vision for the EU payments market in detail. There’s lots of interesting stuff in there, but I was particularly interested in their views on the regulatory environment.
I couldn’t help but notice this paragraph on page six…
“From a data privacy perspective, global BigTech’s existing data superiority combined with access to payments data should be concerning and could lead to unintended negative outcomes for EU citizens.”
This is not a new position. It’s been obvious to any serious surveyor of the European payments landscape that it has been tilted. This is what I wrote for Wired magazine back in 2017:
“Non-banks are about to get a huge boost from European and UK regulators, thanks to the European Commission’s Second Payment Services Directive (PSD2)”.
I’m hardly the only person to have realised that PSD2 would mean that the playing field is tilted against banks and in favour of Big Tech. In fact I gave a keynote address on this topic at PaymentsNZ a couple of year ago, so if you are interested in a more detailed explanation of why the current regulatory environment is unsatisfactory, put your feet up and watch this:
The question is what to do about it now. Fortunately, I wrote about this in some detail more than a year ago, so if the European banking industry needs some help in formulating specific policies to lobby the legislators for, I stand ready to point the way. Last year, following the Paris Fintech Forum where this topic was discussed, I commented on the suggestion from Ana Botin of Santander that organisations holding personal data ought to be subject to some regulation to give API access to the consumer data. Not only banks, but everyone else should provide open APIs for access to customer data with the customer’s permission. This is what the European banks are asking for in their vision document. They want “concrete support” from policy makers to help achieve their objectives, including this levelling of the playing field between banks and Big Tech competitors, brining in a mutually-beneficial approach to data sharing address the inherent asymmetry in the post-PSD2 environment.
So, yes, Open Banking. But open everything else as well. Particularly Open Bigtech. This sharing approach creates more of a level playing field by making it possible for banks to access the customer social graph but it would also encourage alternatives to services such as Instagram and Facebook to emerge. If I decide I like another chat service better than WhatApp but all of my friends are on WhatsApp, it will never get off the ground. On the other hand, if I can give it access to my WhatsApp contacts and messages then WhatsApp will have real competition.This is approach would not stop Facebook and Google and the other from storing my data but it would stop them from hoarding it to the exclusion of competitors.
Forcing organisations to make this data accessible via API would be an excellent way to obtain the level playing field that the European banks are calling for. This would kill two birds with one stone, as we say in English: it would make it easier for competitors to the internet giants to emerge and might lead to a creative rebalancing of the relationship between the financial sector and the internet sector. So, if the European Union wants to begin thinking about PSD3, in my opinion it writes itself.