What can we learn about open banking from a fintech’s two million loan applications?

This is what Rachel Nam, assistant professor of finance at USI Lugano and the Swiss Finance Institute, set out to discover. Using data provided by Auxmoney, Germany’s largest fintech lender, she found that when people voluntarily share access to their bank account data, they are more likely to be approved for a loan—and to receive better terms. What’s in it for the fintech? Lower default rates.

The above summary only scratches the surface of this award-winning, in-depth study which has the ear of fintechs as well as policymakers – as you can see from the photo of Prof. Nam discussing her study with European Central Bank president Christine Lagarde.

You can read Prof. Nam’s paper “Open Banking and Customer Data Sharing: Implications for Fintech Borrowers” https://ssrn.com/abstract=4278803. If you are pressed for time, listen to a 15-minute AI-generated podcast about the paper here.

Prof. Nam’s study is just one example of a collaboration between fintechs and academic researchers. Future Finance Fest (3f) seeks to encourage more of them – for a list of reasons why fintechs and academics should converse and collaborate, see https://fufifest.org/why-attend. If you are a fintech founder open to such a collaboration, come to the inaugural 3f event in Vilnius, Lithuania, 25-27 August (the alternative is to go on www.ssrn.com and find academics who are interested in the same topics as you). And if your fintech happens to be interested in conducting A/B testing related to open banking / consumer privacy issues, Prof. Nam would be glad to hear from you – visit her site for more information.

David Stolin is a professor of finance at TBS Business School in Toulouse, France and co-founder of Ed.movie, Inc. His academic research has been published in such leading outlets as Journal of Finance and Management Science. His work on applying industrial-grade humor to make finance ideas irresistible can be found on www.youtube.com/@ed-movie