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Opinion 04 June 2019

We should extend EU bank data sharing to all sectors

Op-ed article by BBVA Group’s executive chairman Carlos Torres Vila published in the Financial Times on June 3, 2019.

Data is now driving the global economy — just look at the list of the world’s most valuable companies. They collect and exploit the information that users generate through billions of online interactions taking place every day. But companies are hoarding data too, preventing others, including the users to whom the data relates, from accessing and using it.

This is true of traditional groups such as banks, telcos and utilities, as well as the large digital enterprises that rely on “proprietary” data. Global and national regulators must address this problem by forcing companies to give users an easy way to share their own data, if they so choose. This is the logical consequence of personal data belonging to users.

There is also the potential for enormous socio-economic benefits if we can create consent-based free data flows. We need data-sharing across companies in all sectors in a real time, standardised way — not at a speed and in a format dictated by the companies that stockpile user data. These new rules should apply to all electronic data generated by users, whether provided directly or observed during their online interactions with any provider, across geographic borders and in any sector. This could include everything from geolocation history and electricity consumption to recent web searches, pension information or even most recently played songs.

“We need a similar global push for common rules on the use of data”

This won’t be easy to achieve in practice, but the good news is that we already have a framework that could be the model for a broader solution. The UK’s Open Banking system provides a tantalising glimpse of what may be possible. In Europe, the regulation known as the Payment Services Directive 2 allows banking customers to share data about their transactions with multiple providers via secure, structured IT interfaces. We are already seeing this unlock new business models and drive competition in digital financial services.

But these rules do not go far enough — they only apply to payments history, and that isn’t enough to push forward a data-driven economic revolution across other sectors of the economy. We need a global framework with common rules across regions and sectors. This has already happened in financial services: after the 2008 financial crisis, the G20 strengthened global banking standards and created the Financial Stability Board.

The rules, while not perfect, have delivered uniformity which has strengthened the system. We need a similar global push for common rules on the use of data. While it will be difficult to achieve consensus on data, and undoubtedly more difficult still to implement and enforce it, I believe that now is the time to decide what we want.

“The next European Commission should prioritise a cross-sector data sharing regulation”

The involvement of the G20 in setting up global standards will be essential to realising the potential that data has to deliver a better world for all of us. There will be complaints about the cost of implementation. I know first hand how expensive it can be to simultaneously open up and protect sensitive core systems. The alternative is siloed data that holds back innovation. There will also be justified concerns that easier data sharing could lead to new user risks. Security must be a non-negotiable principle in designing intercompany interfaces and protecting access to sensitive data. But Open Banking shows that these challenges are resolvable.

The EU has been at the forefront of setting out clear rules for data and the rapidly growing digital economy. It must continue to champion users, while helping to drive innovation and competition. The next European Commission should prioritise a cross-sector data-sharing regulation and show how open data can boost innovation, benefiting consumers and businesses. A comprehensive regulatory framework on data would boost the EU’s overall competitiveness. The next task would be to lead discussions at the G20, aiming at a much needed global consensus on this matter.

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