CC2021(01) Giya G. Kagee S. and Thibane. T. Regulating Data Markets through Open Banking Lessons for South Africa

This research explored the approaches to Open Banking adopted globally and draw lessons for the implementation of Open Banking in South Africa. The research is premised on the fact that despite the existence of potential benefits of Open Banking, South Africa is still lagging in terms of Open Banking implementation. The research found that the key pillars that have a bearing on Open Banking implementation include the type of data involved, data ownership, payment for data, opening of APIs and data privacy and security. As such, for Open Banking implementation to be a success in South Africa regulatory guidance is needed on these aspects. International experiences show that there is no universal approach adopted in Open Banking with countries adopting either a market-led or regulatory led approach while others transition from market led to regulatory led regimes. In South Africa, this research observes that due to the economic incentives of banks in a highly concentrated market, a regulatory led approach may be appropriate. Notwithstanding, this research notes that whichever approach is pursued in South Africa, i.e., whether a market-led, or regulatory-led approach, relevant regulators including the Information Regulator must provide direction on the main pillars of Open Banking. This research has also observed that while not yet an imminent threat, the Open Banking initiative may invite the entry of BigTech firms and not just Fintech start-ups into the financial system. Given potential systemic risks and potential competition concerns raised by the entry of Bigtechs, a pre-emptive approach must be adopted regarding the involvement of Bigtechs in the South African financial market.