Bank­ing on An­a­lyt­ics

The Economic Times - - Breaking Ideas -

Buz­zwords like “big data” typ­i­cally bring to mind quan­ti­ta­tive ex­er­cises like the ap­pli­ca­tion of al­go­rithms and an­a­lyt­ics. While th­ese are cer­tainly crit­i­cal steps to gain­ing in­sight, a more fun­da­men­tal build­ing block of the data mar­ket is ac­cess. Eas­ier ac­cess to data has be­come a hot topic in all in­dus­tries, none more so than fi­nan­cial ser­vices.

For in­stance, the G20’s An­tiCor­rup­tion Work­ing Group has iden­ti­fied open data as a pri­or­ity to ad­vance pub­lic sec­tor trans­parency and in­tegrity. From a com­mer­cial stand­point, data can serve as a cat­a­lyst for new prod­ucts and busi­ness mod­els. The Euro­pean Union has been proac­tive on this front, set­ting the rules of en­gage­ment through the up­dated ver­sion of the Pay­ment Ser­vices Di­rec­tive.

Data-shar­ing is of­ten ac­com­plished through an ap­pli­ca­tion pro­gram­ming in­ter­face (API), an in­tel­li­gent con­duit that al­lows for the flow of data be­tween sys­tems in a con­trolled yet seam­less fash­ion. APIs have been lever­aged in bank­ing set­tings for years. Given break­throughs in ad­vanced an­a­lyt­ics and the mar­ket trac­tion of nu­mer­ous non-bank fintech com­pa­nies, how­ever, APIs are re­ceiv­ing re­newed at­ten­tion as a means to en­hance the de­liv­ery of fi­nan­cialser­vices­to­both­re­tail­con­sumers and busi­ness cus­tomers.

While open bank­ing stands to ben­e­fit end users and fos­ter in­no­va­tion­sand­newar­ea­sof com­pe­ti­tion­be­tween­banksand­non­banks, it is also likely to usher in an en­tirely new fi­nan­cial ser­vices ecosys­tem, in which banks’ roles may shift markedly.

From “Data Shar­ing and Open Bank­ing”

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