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Mar
24

New European rules will open up retail banking

From: The Economist

The dangers to privacy and security are outweighed by the benefits

MORE treasured than the bullion in its vaults are the data a bank has stored on its servers. Bankers know what their customers eat, where they shop and, increasingly, what they get up to online. It is possible for customers to share these data with others, but the process is cumbersome. In effect, banks enjoy a monopoly over data that has helped them get away with lousy service and fend off newcomers with better ideas. In Europe, at least, that is all about to change.

The source of this upheaval is a new set of regulations, snappily named the Second Payment Service Directive, or “PSD2” (see article). The rules, which are being finalised and will be in force from January next year, will compel banks to share data easily with licensed third parties (if that is what their account-holders want). Bankers in Europe squeal that their profits and customer relationships are under threat. Fearing they could be next, America’s bankers are already lobbying their regulators to keep their data monopoly intact. Such reactions are predictable and wrong.

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