Open Finance – Part 1: Customer Experience

As the global market quickly shifts to a data-driven environment, organizations and individuals alike are quickly looking to leverage their own data to strengthen their decision-making capabilities. In heavily regulated industries such as consumer finance and banking, more efficient use of this data, as well as leveraging third parties could open more doors and offer increased insight into financial opportunities and decisions. Managing risk is never binary, and banks seeking to see a true picture of an individual's or organization's financial portfolio or financial stability is not a black and white exercise. Data has become increasingly important in the risk management process and in today’s landscape, the onus to protect this valuable commodity is top of mind of any institution or organization. To add further complexity to the mix, banks and financial organizations are often required to share this sensitive data with third-parties in their day-to-day processes. Coupled with increasingly stringent regulations being introduced (along with hefty fines if not followed), the exercise of sharing financially sensitive data is a complicated and high-risk endeavor. Open Banking provides a framework for banks to securely share customer data with applications, competitors and other interested parties. This system requires banks to truly embrace a “customer focus” and assume the platform provider’s role in an open and transparent ecosystem. Enabling individuals and organizations to share their personal financial data with trusted third parties has a potential to deliver to reshape the financial landscape and offer a variety of innovations and improvements. However, this process is not without its inherent risks. Increasing the access to the sensitive data without proper safeguards, guidance and frameworks, can also introduce new risks to the financial system, erasing any gains that innovation could offer.