Friday seminar - Tania Babina, (Columbia Business School), Customer Data Access and Fintech Entry: Early Evidence from Open Banking
Open banking is the trend of empowering customers to share their banking data with fintechs and other banks. Tania Babina and co-authors compile a novel dataset documenting that governments in 49 countries have implemented open banking policies and 31 more are in active discussions. Following adoption, fintech venture capital investment increases by 50%, with more comprehensive policies showing larger effects. They examine the policy tradeoffs with a quantitative model of consumer data production and usage. Their calibrations show that customer-directed data sharing increases entry by improving entrant screening ability and product offerings, but harms some customers and can reduce ex-ante information production.