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Florida Journal of International Law

Abstract

Finally, open banking is on a path to be established in the United States after more than a decade since the laying of its legislative foundation in the Dodd-Frank Act. With the issuance of an advance notice of proposed rulemaking by the Consumer Financial Protection Bureau, and the Executive Order on Promoting Competition in the American Economy, regulatory momentum is building. However, there is much work to be done in the legal design of rights, responsibilities, and relationships under open banking in the U.S. before it can empower consumers to derive value from their banking data. Fundamental issues need to be addressed including what data is covered, in what form it is provided, how the holding and use of the information is controlled, the security and accuracy of the shared data, and the transparency of the data sharing. A broader perspective of open banking as a system will also be necessary to ensure the participation of banks, data recipients, intermediaries and other service providers needed to deliver wider economic outcomes relating to competition, innovation, inclusion, and consumer protection. This Article explains a systemic perspective of open banking as a network of interconnected and interdependent participants sharing valuable customer data and analyses how access and stability need to be balanced in open banking’s legal design. It compares the legal features which manage participation in the established open banking systems of Australia and the United Kingdom and evaluates them against equivalent legal features in banking payment systems, which are also networks for the communication of valuable information. Through this comparison and evaluation, this Article finds that the United Kingdom (U.K.) open banking offers a lower level of regulation of indirect participation and outsourcing than Australian open banking and more limited rights to suspend participation and less clear protection of the value in customer data in participant default and insolvency. It also shows that the design of access and stability under Australian open banking is more aligned with banking payment systems in the management of potentially systemic risks. By demonstrating how differing legal approaches to balancing access and stability in open banking can affect the participation on which open banking’s success depends, this analysis will be critical for the design of America’s open banking system.

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