Open banking allows customers to share their financial data securely with third-party providers, such as fintech companies, thereby increasing competition and expanding access to financial services. While this shift promises benefits such as improved product offerings and expanded financial inclusion, it also introduces significant technical, social, and economic risks. We develop a continuous-time model using a search-and-match framework to analyze borrower heterogeneity and competition between banks and fintechs. Our analysis shows that open banking reshapes financial services by levelling the playing field between banks and fintechs. However, while it enhances competition, it could also over-empower fintechs, potentially reversing the benefits to borrowers. The talk is based on joint work with Ranu Castaneda.

Bio: Christoph Frei is a Professor of Mathematical Finance and Chair of the Department of Mathematical and Statistical Sciences at the University of Alberta. He received his PhD in mathematical finance from ETH Zurich while working in the financial industry, and subsequently held a postdoctoral position at École Polytechnique in Paris. His research, which includes collaborations with institutions such as the U.S. Federal Reserve and UBS, focuses on risk management and the application of quantitative methods in finance.