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Journal of Financial Economics Vol. 169 2025

Customer data access and fintech entry: Early evidence from open banking

Tania Babina1,2,3; Saleem Bahaj1,4,5; Greg Buchak6,7; Filippo De Marco; Angus Foulis5; Will Gornall8; Francesco Mazzola9; Tong Yu10

1 Centre for Economic Policy Research · 2 Massachusetts Institute of Technology · 3 University of Maryland, College Park · 4 University College London · 5 Bank of England · 6 Stanford Medicine · 7 Stanford University · 8 University of British Columbia · 9 University of Turin · 10 Imperial College London

open access

Abstract

Open banking (OB) empowers bank customers to share their financial transaction data with fintechs and other banks. New cross-country data shows 49 countries adopted OB policies, privacy preferences predict policy adoption, and adoption spurs fintech entry. UK microdata shows that OB enables: (i) consumers to access both financial advice and credit; (ii) SMEs to establish new lending relationships. In a calibrated model, OB universally improves welfare through entry and product improvements when used for advice. When used for credit, OB promotes entry and competition by reducing adverse selection, but higher prices for costlier or privacy-conscious consumers partially offset these benefits.

DOI
10.1016/j.jfineco.2024.103950
Volume
169
Pages
103950
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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