The combination of data from different sectors holds the greatest potential to fully unlock the benefits of the future “data sharing economy”.

As the key input for developing AI and the digital economy at large, data is foundational to the EU's competitive edge. So I had the pleasure last week to discuss data when I participates in a EuroFi panel regarding the EU proposal of Regulation on Financial Data Access (FiDA). Eurofi is the premier platform for dialogue between European Union regulators and the financial sector, with this particular gathering drawing over 1,300 experts. Occurring on the cusp of the EU's new political cycle (2024-2029) and preceding the European elections in June, the forum emerged as a key venue for discerning trends and priorities that will shape the agenda of European Institutions for the next few years

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Discussions spanned a broad spectrum of topics, from economic security and the capital markets union to the digital euro and defence expenditure. But framing all the discussions was the topic which took centre stage –– the EU economy's competitiveness.

So, with European competitiveness firmly in mind the FiDA proposal is extremely topical. It aims to increase competition in the European financial sector by taking another significant step in the evolution of how financial services treat data. From the already existing Open Banking, that requires banks to share, at a customer’s request, their data in a secure, standardized form with authorized organizations, to an Open Finance framework, which broadens the sharing to include the wider finance sector, including services like pensions, insurance, business and consumer loans services.

It forms a part of the EU's comprehensive digital framework, including pivotal initiatives like the Digital Markets Act, the Data Governance Act, and the AI Act, all part intended to harness the benefits of data to spur competition and benefit consumers.

Data is different. It is what economists call a non-rival good. Your use of it does not exclude another’s use of it. So data sharing has the potential to revolutionize our economies. At the margins, FiDA will undoubtly have a positive impact on the ways we can manage our finances at the margins. For example, it will allow savvy consumers to use new services where one can aggregate information about your entirely financial portfolio in a single app.?

But it is also very limited, as it is not true Open Data: it only covers financial services related data, deepening the already existing asymmetry with how we treat data from other sectors, that started with the PSD2 regulation.

Achieving full benefits from the “data sharing economy” requires a new mindset and the development of targeted skills for companies and public institutions while citizens have the data literacy to understand the value of data to ensure the ecosystem is works as intended. Moreover, it requires more ambitious regulations. This sectoral approach falls short as it is in the combination of data at scale from different sectors where the maximum benefit can be derived from machine learning.

In summary, while FiDA offers a promising framework, there are still some challenges that need to be addressed:

·????? Cross-sectoral approach: In the provision of financial products and services it is the combination of data from different sectors holds the greatest potential, and where the application of machine learning can work its magic. As an example of an open data use case, when combining financial data with energy consumption, carbon footprint, digital behavior or public administration activity, it will enable financial services companies to build more accurate lending solutions for carbon offsetting or fraud mitigation use cases. Which at present is impossible or hard-to-build under current data-sharing constraints.

·?????? Ensuring consumer awareness: Consumers need to be data literate and aware of the benefits of the broader data economy and their rights and responsibilities under FiDA to fully benefit from the regulation.

·?????? Establishing the data sharing schemes: While the market-driven approach is a great opportunity for ecosystem participants to really focus on developing clear use cases, it′s important that the regulation gives to this endeavor the necessary time to be deployed (initial proposal of 18 months is not considered feasible).

• Incentive Model: Also, adding elements such as a compensation model and a liability regime brings incentives for data holders to participate more actively and, in the end, benefit the customer through more innovation and competition.
• Addressing security concerns: Data users need to implement robust security measures to protect consumer data from unauthorized access or misuse. The reference to the Digital Operational Resilience Act (DORA) here is welcome.