The Association for Financial Markets in Europe (AFME) has underlined the importance of a level playing field for responsible data sharing and made recommendations for an Open Finance Framework ahead of the publication of the European Commission’s framework for data access in financial services that is due to be published in coming months.
EFMA shares its recommendations for open finance in a paper published today, ‘Open Finance and Data Sharing – Building Blocks for a Competitive, Innovative and Secure Framework’.
“Open finance in the EU’s data economy will transform the way banks share data with each other, and also with third-party providers such as fintech companies. For financial services this could mean that access to new, broader data sets could enhance the way banks operate and encourage innovation across sectors,” says Elise Soucie, associate director of technology and operations at AFME.
But she cautions: “With innovation comes potential for unintended consequences such as sharing data with participants in other sectors that may already have a dominant share of both individual and corporate data. This could lead to monopolies and the exploitation of data.”
AFME has identified four key principles to help address these risks and to support policy makers in the development of a robust open finance framework.
The principles cover:
- A level playing field – data can only be shared across sectors if regulation consistently addresses risks and market players are regulated
- Interoperability and an appropriate level of standardisation – any harmonisation would need to occur across EU Member States, while also being complementary to global frameworks
- An appropriate framework for compensation – this would ensure fair allocation of costs across the data value chain and safeguard fair competition
- Clear liability provisions – these would provide legal clarity with respect to the access, processing, sharing, and storage of data, and should be consistent with GDPR.
The paper follows AFME’s response this summer to the European Commission’s targeted consultation on ‘Open Finance and Data Sharing in the Financial Sector’.
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