The European Commission wants financial firms and other companies to share more customer data to create a “broader open finance space” with new services for citizens, according to a draft of the Digital Finance Strategy seen by EURACTIV.
The strategy, which could still be subject to changes, is expected be presented later this month. It outlines the Commission’s priority actions by 2024 to make “the benefits of digital finance available to European consumers and businesses,” the draft document reads.
One of the key objectives is to set up a new ‘open finance’ framework.
The goal is to further deepen the progress made with the landmark revision of the Payment Services Directive (PSD2), which forced banks to share part of their clients’ data with new digital firms operating in the finance sector (Fintech).
The PSD2 directive led to the creation of hundreds of startups and apps offering innovative payment services.
The Commission now plans to launch a new review of the Payment Service Directive next year, including an assessment of how far it should go.
Building on that review, the EU executive will propose legislation on a “broader open finance framework” by mid-2022.
In the strategy, the Commission points that “further steps towards enhanced data sharing and openness across and within sectors, in compliance with data protection and competition rules, will enable the financial sector to fully embrace data-driven innovation.”
As a result, new products for consumers and businesses could be created in Europe and it will help to set up a single market for data, one of the priorities to progress on the digital front.
Banking sector representatives have complained in the past about the fact that PSD2 forced them to share their customer data with Fintech companies, while social media platforms and other sectors still gather an immense amount of information.
Another financial sector representative mentioned utilities, including energy companies, as a potential field to interact in a new open finance framework.
The Commission argues that access to more customer data enables service providers to offer more personalised services, although customers must retain control of their information.
“A balanced regulatory framework for the sharing of data on financial products will support the financial sector in fully embracing data-driven finance, and effectively protect data subjects, who must have full control over their data,” the draft document says.
The Commission is working on various fronts in order to reach this new and revolutionary “open finance” space. Given its wide and deep implications, the proposal will build on initiatives focusing on data access, including the upcoming Data Act, and the Digital Services Act.
The Commission is also reviewing its competition policy to see whether specific measures are needed to ensure “fair access to platforms” for all financial service provides.
Besides the new ‘open finance’ framework, the digital finance strategy also includes three additional objectives and a set of measures to achieve them.
The objectives are to tackle fragmentation in the Digital Single Market for financial services; to ensure that the EU regulatory framework facilitates digital innovation; and to apply the “same risk, same rules, same regulation” principle to address new challenges and risks associated with the digital transformation.
The Digital Finance Strategy will be published together with the Commission’s new rules on cryptocurrencies, also published in advance by EURACTIV.
In addition to what was included in the cryptocurrencies proposal, the EU executive said in the Digital Finance Strategy that it will consider updating the prudential rules for crypto-assets held by financial firms, which could force banks with these digital assets to hold more capital as a cushion, given the volatility and risks associated with these assets.
[Edited by Zoran Radosavljevic]