Why Existing Open Banking Models In Europe Are Underperforming? Insights For The Us And Canada

More than four years after its launch, open banking models present ups and downs in the UK and the EU. Considering the investments made, the critical mass necessary to make these services profitable is far from being reached. In parallel, the extension of open banking to the client's entire financial life (open finance) and even to other sectors (Digital Markets Act) is under serious consideration, at least in the European Union. This article summarizes the results of a research project developed over the last three years to understand the foundations on which open banking models are based and identify levers to improve their performance. The study unveils several caveats in current open banking schemes. First is a lack of understanding of what open banking is. Second, disproportionate attention on the service provider infrastructure and the ecosystem of new entrants. Finally, a deprioritization of all those aspects related to the end customer, who is the critical element in any data-sharing relationship. As a result, the study proposes a roadmap based on five key elements that could mitigate the main weaknesses identified in the current open banking models. Likewise, developing open banking regulations (e.g., US and Canada) could benefit from including these elements from the design stage