Technical Note on Open Banking: Comparative Study on Regulatory Approaches

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Open banking has emerged strongly in the past few years as a system to give customers the right to share with parties they trust the information that banks have about them in a secure manner and also as a way to open up processes and services in banking. The main objectives pursued by regulatory frameworks that define open banking are generally encouraging innovation and fostering competition, resulting in new products and services at competitive prices to the benefit of consumers. With that in mind, and with the United Kingdom as a first mover, different regulatory approaches have been developed. Some of them are regulatory driven, while in other cases, with a hands-off approach, they have been led by industry. In between, we also find collaborative models in which both the public sector and private-party players are instrumental to the definition and adoption of open banking. Regulatory approaches also differ in the scope of data that is to be shared, the definition of the financial institutions that have to publish their application programming inter-faces and share data, the mandatory or voluntary nature of the framework, the definition of the type of license that third-party providers need to operate, and the definition or not of concrete standards, among other things. While there is no single right approach, there are common challenges that countries considering regulation certainly need to bear in mind in terms of the definition and interoperability of technical standards, security, governance, and consent and authentication mechanisms. Although open-banking regulatory frameworks have been operating for less than two years at most, early lessons can be drawn from the first movers and the debates that are taking place between regulators and market participants.
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World Bank. 2022. Technical Note on Open Banking: Comparative Study on Regulatory Approaches. © Washington, DC. License: CC BY 3.0 IGO.
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