A legal analysis of open banking in the promotion of financial data antitrust in China

Abstract

Open banking develops quickly in China where several large state-owned and private commercial banks have participated in open banking, but the legal foundation is insufficient. The theoretical basis of developing open banking lies in breaking down ‘Data Silos’ to promote the free circulation of data and strengthen competition in the financial data market. Open banking could promote ‘financial data antitrust’, which means reshaping the competitive landscape through promoting the share of monopolized financial data owned by large financial institutions to break their monopoly status in the financial market. It may also bring monopoly risks to financial institutions such as data aggregators and technology platforms. Based on the regulatory and legislative experience of other regions, China should continue the ‘government-guided’ model for developing open banking and pay more attention to protecting financial consumers and increasing their data control rights to better balance privacy protection and financial data sharing. China should set up a rule for ‘financial data right separation’ and formulate antitrust regulations for data aggregators. Based on the special status of Fintech platforms, China should not copy the open banking models of developed countries, but create a ‘two-way sharing’ open banking mechanism to prevent the risk of platform data antitrust.