As Professor of Financial Technology and Law, Emanuel van Praag has a lot to say about the fintech sector and its legal aspects. On March 1, he joined Kennedy Van der Laan as counsel of their fintech practice. How does he combine these positions? And what obstacles does he see in the future within fintech? In an interview with Data&Privacyweb, Van Praag shares his thoughts on Open Finance, the proper handling of the AVG and the societal dangers of datafication.
In addition to my work as counsel at Kennedy Van der Laan, I am a professor of Financial Technology and Law at Erasmus University Rotterdam. My academic work is very useful in practice and vice versa. I write academic articles based on experiences in my legal practice and my academic research is useful when advising clients.
Kennedy Van der Laan, as the law firm for everything related to the combination of tech and law, has an excellent reputation in the market. The experience of the fintech team further appeals to me, as does the informal nature of the firm and its focus on entrepreneurship and society.
The main challenge is that market participants are finding it difficult to fill in the open standards in the AVG. Added to this are increasingly conflicting, but in themselves valid, interests. In the financial sector, parties need to know their customer well in order to protect them from taking too much risk, borrowing too much or to combat money laundering. On the other hand, the AVG requires that data be processed only when necessary. New fintech parties have the added problem of being at a data disadvantage compared to established parties. They must be more creative to compete with the established order in their services and risk management.
Furthermore, more and more regulations are coming in that require parties to share data. The AVG aims precisely to prevent unnecessary over-sharing of data. As a result, parties are caught between legal obligations and the various regulators who oversee these obligations. They have to figure out for themselves where the balance lies between the conflicting interests and how one law is related to the other, hoping to keep all stakeholders happy.
I myself concentrate on the Financial Data Space and Open Finance. PSD2 is a forerunner in this. This law facilitates that parties other than your own bank, can gain insight into payment transactions. However, the idea is that under Open Finance, all data relevant to financial services will become available in real time. Think of information about investments, loans, insurance and pensions. But data such as sales on digital platforms are also interesting for financial services, such as the number of rides with Uber (and reviews of these rides) or sales via bol.com.
The European Commission is now investigating which data are useful for the financial sector. I myself, as a member of the Expert Group on European Financial Data Space, may make a contribution.
My motivation is mainly that I remain curious. I like to learn to understand things I don't yet know. Furthermore, I get satisfaction from creating beautiful products, for example a well-running advice, an article or book, a beautiful PowerPoint for a lecture or even a beautiful, clear graphic.
I have two key thoughts when using data represented by two books.
The first thought is that data leads to judgments in the private sector. Unfortunately, if you are associated with unfavorable data, you are "out of luck" in all kinds of commercial relationships. This is especially true in the financial sector, because in a product such as a loan or insurance, who the client is is pre-eminently important. After all, this determines the risk. However, this also has socially negative consequences. For example, poor people in England, because of their more unfavorable data, pay on average much more for financial products than wealthier ones.
I myself experienced what data can trigger when an entrepreneur from Italy refused my credit card. What data led to this I do not know, but I suspect I had fallen into the potential fraudsters' bin. As a result, the order had to be paid for in cash at the mail order point with an additional 20 euros in transaction fees. Because it was a one-off, I could still laugh about it, but imagine that happening to you over and over again... This reality is nicely explained in the book Weapons of Math Destruction by Cathy O'Neil.
The second thought relates to the coming to power of an unsavory regime. The enormous datafication makes it increasingly difficult to evade such regimes. The means of repression are becoming more intrusive. I would recommend to everyone the book Downfall by Jacques Presser about the persecution of the Jews in the Netherlands and ask yourself how that would work in the present era. How can you still hide when Facebook and LinkedIn reveal who your friends and acquaintances are? How can you still resist when facial recognition technology allows the government to track you in real time as you walk down the street?
