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The effects of open banking on fintech providers: evidence using microdata from Spain

Author

Listed:
  • Andrés Alonso-Robisco

    (BANCO DE ESPAÑA)

  • José Manuel Carbó

    (BANCO DE ESPAÑA)

  • Pedro Jesús Cuadros-Solas

    (CUNEF UNIVERSIDAD AND FUNCAS)

  • Jara Quintanero

    (BANCO DE ESPAÑA)

Abstract

Open banking initiatives, which aim to increase competition and innovation in the financial sector by enabling the customer-authorised sharing of financial data among banks, regulated third-party providers and other financial stakeholders, are becoming widespread around the world. This paper investigates the impact of open banking on the development of the fintech sector, focusing particularly on payment-related financial services. We utilise the implementation of the Second Payment Services Directive (PSD2) in Europe as a natural experiment and employ a difference-in-differences methodology to analyse a unique microdata set of 406 Spanish fintech firms from 2014 to 2022, sourced from the Banco de España Central Balance Sheet Data Office and Fintech Radar. Our findings reveal that following PSD2, fintech firms specialising in payment services (Paytech) improved their performance compared with non-payment fintechs (control), with this improvement driven primarily by revenue growth rather than cost reduction. Additionally, treated fintech firms exhibited a significant reduction in long-term bank debt reliance, securing more stable market-equity funding. We also find that Paytech firms increased their liquidity holdings, reduced their labor intensity while increasing their labor costs and enhanced their productivity. Our results contribute to the literature on open banking by providing empirical evidence of its benefits for fintech firms, particularly in the payment sector, and underscore the importance of regulatory frameworks in fostering innovation and competition. These insights are valuable for policymakers aiming to enhance financial sector dynamics through data-driven regulations.

Suggested Citation

  • Andrés Alonso-Robisco & José Manuel Carbó & Pedro Jesús Cuadros-Solas & Jara Quintanero, 2025. "The effects of open banking on fintech providers: evidence using microdata from Spain," Working Papers 2514, Banco de España.
    • Handle: RePEc:bde:wpaper:2514
    DOI: https://doi.org/10.53479/39138
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    References listed on IDEAS

    as
    1. Liudmila Zavolokina & Mateusz Dolata & Gerhard Schwabe, 2016. "The FinTech phenomenon: antecedents of financial innovation perceived by the popular press," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-16, December.
    2. Martin Brown & Christian Zehnder, 2007. "Credit Reporting, Relationship Banking, and Loan Repayment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(8), pages 1883-1918, December.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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