TOPIC 3.5

Economic Consequences of Mandated Data Sharing

⏱️30 min read
📚Research

4. Economic Consequences of Mandated Data Sharing

4.1. Context and Strategic Importance

Mandated data sharing is a potent instrument of market restructuring, designed to alter competitive dynamics and trigger significant reallocations of economic surplus.

4.2. Impact on Market Participants

  • Consumers: Gain variety and lower search costs, but gains may be limited by financial literacy and trust.
  • MSMEs: Alleviates credit access problems by enabling secure data sharing with wider range of lenders.
  • Incumbents: Face downward pressure on profit margins from competition, but may realize efficiency gains.
  • New Entrants (Fintechs): Primary beneficiaries; mandated access erodes informational moats of incumbents.

4.3. Structural Changes and Systemic Risks

Open Finance accelerates the trend of non-bank lenders gaining market share. This introduces new challenges for supervision, requiring closer scrutiny of riskier credit portfolios and management of system-wide cybersecurity risks.

4.4. Concluding Transition

This analysis sets the stage for a granular look at the operational economics of managing the individual API product lifecycle.