Abstract

Abstract Open Banking requires banks to share customer financial data with approved third-party providers (TPPs) through secure APIs. This is a policy and technology framework, which is built on build on Information Systems platform. Regulations such as PSD2/PSD3 in Europe and the CFPB Section 1033 rule in the United States have made this data sharing a legal requirement. Yet despite these mandates, consumer adoption of Open Banking services remains much lower than expected. Many banks create processes that technically comply with the law but make customer participation unnecessarily difficult. This paper argues that this gap is not a technology problem — it is an information systems (IS) governance failure. This TREO Talk introduces the Open Banking IS Governance Trilemma — the idea that any Open Banking system must balance three important objectives that cannot all be fully achieved at the same time: (1) Consumer Data Sovereignty: giving users real, informed control over who can access their financial data; (2) Platform Openness: allowing FinTech companies and TPPs to freely offer innovative financial services through open APIs; and (3) Regulatory Compliance: meeting the risk management, anti-money laundering, and consumer protection requirements of financial regulators. Similar to the "impossible trinity" concept in monetary economics (Mundell, 1963), Open Banking architects can realistically achieve only two of these three objectives at the same time — and the choice of which one to sacrifice has significant consequences for consumers, banks, and the FinTech industry. Cross-national evidence supports this framework: some countries prioritize consumer data control but create excessive barriers for FinTech innovation; others promote platform openness but expose consumers to data misuse risks; and a third group focuses on regulatory compliance but limits both consumer choice and market competition. Each has effectively chosen which objective to sacrifice — rarely in an explicit or theoretically justified way — resulting in IS governance failures that no jurisdiction has fully resolved. This TREO Talk presents three research questions for community discussion: (1) What IS design principles explain why different countries make different Open Banking governance choices? (2) How does the trilemma affect consumer trust and willingness to share financial data? (3) What IS governance tools — such as consent management platforms, real-time API audit trails, or federated identity systems — can help reduce these trade-offs? This research is grounded in both active empirical work on Open Banking adoption outcomes and 18 years of commercial banking experience, bridging theoretical questions and real institutional challenges observed in practice. References Jacobides, M. G., Cennamo, C., & Gawer, A. (2018). Towards a theory of ecosystems. Strategic Management Journal, 39(8), 2255–2276. Mundell, R. A. (1963). Capital mobility and stabilization policy under fixed and flexible exchange rates. Canadian Journal of Economic and Political Science, 29(4), 475–485. Zachariadis, M., & Ozcan, P. (2017). The API economy and digital transformation in financial services: The case of open banking. SWIFT Institute Working Paper, 2016-001.

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