Organization for Economic Co-operation and Development (“OECD”) has published its paper presenting an outline of the diverse frameworks implemented for open banking and other data sharing arrangements in different jurisdictions, discussing expansion of open banking related data arrangements, which is referred to as open finance (“OECD Report”). Even though this expansion is happening at varying speeds, there are similarities in the approaches and experiences of different OECD and non-OECD countries, and challenges such as security, privacy, consent management, liability, reciprocity, incentivizing account servicing payment service providers, still need to be resolved.
Legal Framework
OECD Report discusses how different countries have established frameworks for open banking. In European Union (“EU”), as Directive 2015/2366 on payment services (“PSD2”) has been adopted by national law of EU member countries, third party providers who are authorized to have access to payment accounts can collect data from an account in order to provide services to that account owner. Payment initiation service providers have even greater access as they can initiate payments on behalf of the customer. The banking law in Japan underwent an amendment in 2018 to encourage open banking initiatives. This involved a non-binding obligation for banks to open their application programming interfaces (“APIs”), allowing financial technology (“fintech”) companies such as electronic settlement agents to access their system. Following the amendment, over 90% of banks have signed API agreements with one or more electronic payment service providers. In some countries, such as Mexico and Israel, the framework has been introduced into law, but implementing regulations have not yet been issued. The US and Switzerland have primarily market-led approaches. Colombia has recently issued regulations for the open financial architecture, while Australia has extended its framework to other sectors beyond banking, for example a framework for data sharing in energy and telecommunications sector has been covered and Brazil has included insurance, open pension funds, investment and foreign exchange. In Korea, an open banking platform has been established to support the exchange of various financial information data between fintech and financial companies.
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