EU to shut door on Big Tech in financial data sharing
US tech giants to be excluded from EU’s Financial Data Access initiative, which enables the sharing of certain customer financial data
Big Tech firms are set to be excluded from access to a European Union (EU)-wide financial data-sharing initiative, in a boost to banks battling to retain market share.
The rules, which are set to come into force soon, were designed to give third-party businesses access to financial data, to allow them to develop services for consumers.
Firms like Meta, Google and Amazon are keen to develop financial products based on data insights, and banks could be cut out if the tech firms develop and offer products and services directly to consumers.
Banks fear the Big Techs could gain significant value from the financial data they hold, at their expense, while the EU wants to protect consumers and its markets.
The Financial Times has revealed that one EU diplomat said: “Big Tech players are actually losing the lobbying fight.”
The European parliament and commission supported fears from banks that sensitive data could be exploited and also increase the domination of US Big Tech firms.
Digital age
According to the EU Commission, FiDA is part of the EU’s plan to bring “the wider financial sector into the digital age”.
“[FiDA] proposes a new framework for secure and open access to customer data across a wider range of financial services,” it said. “This framework places consumers’ interests, competition, security and trust at their centre.
The “proposed framework seeks to ensure the EU’s financial sector is fit for purpose and adaptive to the digital transformation, and the risks and opportunities it presents – in particular for consumers”.
In a document seen by The Financial Times, Germany suggested to other EU countries that Big Tech groups be excluded, “to promote the development of an EU digital financial ecosystem, guarantee a level playing field and protect the digital sovereignty of consumers”.
Chris Skinner, fintech industry expert and CEO at The Finanser, said: “I think the main issue the EU regulators have with Big Tech is that, if they can access the financial data of EU citizens, then it could lead to US control over them. Hence, they want to ensure our data is protected.”
Even traditionally open fintech investors are beginning to worry about the EU being too malleable when it comes to regulation.
Political fears
European fintech entrepreneur Matthias Kröner said that in the “old days”, he would have been open to granting access to this data to big tech companies, “but probably not in today’s political environment”.
“We currently see strong regulatory competition: while the US is unleashing big tech, the European commission needs to protect our standards,” he told Computer Weekly.
Kröner added that the big tech firms only support EU regulations when it suits them. “Naturally, they would love to pick and choose the rules they support or not,” he said.
“European regulation might not be everybody’s darling, but first of all it is made to protect the people, it’s not made because the EU is an autocratic state,” added Kröner. “And Europe is under increasing pressure for exactly that.”
He said that there is currently a higher-than-ever alert level because “we are also living in the era of AI”.
Read more about fintech
- Leading light in women in fintech says Europe must take separate path to Trump’s US on diversity, equity and inclusion.
- The UK’s fintech sector attracted $3.6bn investment last year, which was only bettered by the US, but how will UK fintech continue to grow?
- Despite having a strong security posture, the financial technology sector could be open to attack via third parties.
