EU Should Not Block Big Tech from Financial Data Access

The European Union is moving to exclude major U.S. technology companies from a proposed regulation to require financial institutions to provide customer data to third parties—a protectionist move that will harm European consumers, entrench incumbents, and reduce innovation in financial services, and likely lead to retaliation from President Trump. The EU should reject the proposal.

The proposed regulation, the Financial Data Access (FiDA) framework, is the EU’s next major step towards creating a secure, standardised, and open framework for sharing consumer financial data, building on the Payment Services Directive 2 (PSD2) that created open banking for payment accounts.

FiDA would extend data sharing beyond payments to mortgage, credit, loans, savings, investments, insurance-based investment products, crypto-assets, occupational and personal pensions, and non-life insurance. Under FiDA, consumers would be able to authorise third parties, known under the law as Financial Information Service Providers (FISPs), to access their financial data to deliver financial tools such as aggregated account dashboards, integrated budgeting, or holistic investment advice.

Yet Germany and several other member states are reportedly advocating for excluding any firms designated as “gatekeepers” under the Digital Markets Act (DMA) from becoming licensed FISPs. The DMA regulates large companies that control access to key online services like app stores or search engines. EU policymakers deliberately designed the DMA’s revenue thresholds to target key American technology companies.

The EU has designated five American firms (Alphabet, Amazon, Apple, Meta, and Microsoft) and one Chinese firm (ByteDance) as gatekeepers. The proposal would exclude these companies not for failing to meet FiDA’s own stringent security and data handling rules, but simply because of their status under this separate, unrelated law. Using DMA designation as the basis for FiDA exclusion is discriminatory and protectionist. Moreover, it is illogical as a platform’s market power says nothing about its ability to securely handle financial data or deliver valuable financial services.

The goal of FiDA is to give consumers control of what financial data to share, with whom, and for what purpose. Excluding an entire category of willing and capable service providers means consumers cannot share their data with services they might prefer to use. If European consumers want to explicitly consent to share financial data with a technology company for specific services, the regulation should enable that choice.

FiDA aims to create infrastructure enabling third-party financial services innovation. The Commission estimates the annual economic impact from enhanced financial data access at €4.6–12.4 billion, premised on competitive pressure driving innovation. Innovation that now may not come.

After all, the proposed exclusion would also limit the potential for new services. Designated gatekeepers wouldn’t be licensed to access a consumer’s full financial picture directly, preventing them from building offerings that combine banking, investments, and pensions with their other services.

For example, Amazon’s website could not show consumers the real-time impact of a purchase on their long-term savings goals right on the product page, an Apple “Wealth” app could not help consumers meet their savings goals as easily as they meet their fitness ones on their watch, and Google Assistant could not see bills in users’ calendars and proactively suggest moving money. Instead, if these companies wanted to pursue such ideas, they would have to work through middlemen, which would limit the seamless integration, design, and efficiency they could otherwise provide.

This move would remove a degree of the competitive threat that would compel financial institutions to modernise. Financial services firms would face competition only from smaller fintechs and other regulated entities—competitors they can more easily match or acquire.

Moreover, in financial services, it is often necessary to combine data from consumers’ finances and provide them with more individuated services—crucial to drive improved consumer outcomes. FiDA’s value comes from its comprehensive scope. By design, on payments, investments, insurance, loans, and pensions, which is a necessary foundation for creating more complete and personalised financial tools. The Commission has said that FiDA’s innovation potential “is conditional on efficient and responsible access to a high volume of customer data.”

Technology companies have demonstrable capability in transforming data into consumer value globally—the core competency of many tech firms is transforming data into intuitive and valuable consumer services across their product suites. This isn’t an ancillary skill for these firms providing trillions in global value; it is the reason for their success and scale. Excluding firms best positioned to provide that efficiency means Europeans get data portability without the innovation that makes it worthwhile.

If Europe wants FiDA to succeed in fostering a more innovative and consumer-friendly financial services market, it should not exclude the very companies that have the potential to make it work best. Singling out firms based on their designation under the DMA is discriminatory and counterproductive. Instead, the EU should focus on creating a level playing field where all companies that meet high standards of security and consumer protection are allowed to compete to offer the best services to European consumers.

Image credit for social media image preview: Atlantic Money/Unsplash