Open finance will help us break barriers and get to our own data
• Even the government has nowhere near the information treasure trove your bank has on you
By now, “data is the new oil” is essentially banal. Tech journos, including myself, are partially to blame for that, but the consultants and marketers can shoulder their share of the guilt too.
That doesn’t, however, make it any less true: data is a valuable resource in itself and can be transformed in innumerable ways into other goods of varying usefulness — the Tupperware and plastic wraps of the data world, perhaps.
But in several ways that comparison doesn’t fit. For starters, there is no limited pool of the stuff to fight over — though we are already fighting over it — and we don’t all have our own personal and pint-sized oil rigs. With data, however, we do. We generate it all the time, in the weirdest and simplest daily ways — how we travel, how we spend, who we visit, what we eat, and on and on.
As a resource, a lot of people and companies want to lay claim to that data. For a while at the beginning of this digital age we just kind of left our personal data lying about with no regard. We would sign it over to anyone with a funny cat video to show us, and it never occurred to us that we might be worse off for that decision. These days, thankfully, we’ve woken up.
Especially in the context of this column, when I’ve written on data lately it has mostly been about clawing back personal privacy, having control or at the absolute least gaining clarity on how our personal data is used by those who collect it, like Google and Facebook.
However, this approach has neglected a huge category of personal data we may want to share more — in very, very controlled ways: our financial data. Even the government — giver of licences and IDs — has nowhere near the data treasure trove on me that my bank has. From the transaction data that has been piling up since I got my first bank card, just about every meaningful fact about me can be extracted. Google knows all the weird things I’ve searched for, but my bank has the receipts.
Earlier this week two pieces of content crossed my eyeline that brought the matter back top of mind. First, a newsletter from 22Seven on the concept of open finance (more below), and then a media release from FNB on making finance data available to a partner (Sage, in this case) via application programming interface (API) — which is their first foray into open finance.
Don’t let the jargon and acronyms scare you, this is not the time to let your eyes glaze over. Open finance sounds drier than a mouthful of talc, but it is actually, potentially, a wellspring of meaningful innovation. Not just in new and gimmicky ways to slice and dice your finance data — though there will be that — but hopefully for new and consequential solutions that could come from this data, which is mostly held by financial institutions that jealously guard access, even from you yourself.
This is what open finance wants to change. The Financial Sector Conduct Authority
(FSCA) has also been doing extensive research and consultation on the area, culminating last year in a survey and then, in December 2020, publication of its Regulating Open Finance Consultation and Research Paper. This includes recommendations on the guiding principles it believes will enable open finance through the Conduct of Financial Institutions Bill.
If I’ve lost you here, I apologise, I’m not a legal or financial expert and am still wrapping my head around some of the implications. What I do know quite well is the notion of transparency and accountability, a promise of the digital era towards which I’m keen to see us making great strides. Open data — as it relates to open governance and transparent public
finance — means the collective scrutiny of the public can be sharply focused on public spending. Open finance means we can open our own data to scrutiny by third parties — in a controlled manner — to get the same kind of granular insight.
Frankly, it strips the financial sphere of some of the mystery it has been so carefully building around itself. It unlocks competition,
challenges monopolies. There are definitely going to be cases of misuse and failings of security. On an individual scale, that simply sucks.
But looking at the broader picture, we’re going to see dramatic gains made — not unlike how the individual smartphone changed telecommunications far more dramatically than the party-line system could.
These two positions are not contradictory, they are two sides to the same coin, the bottom line of which is that both public and private data are valuable, or in a more traditional aphorism, knowledge is power, and I’m keen to take some of mine back.
DON’T LET THE JARGON AND ACRONYMS SCARE YOU, THIS IS NOT THE TIME TO LET YOUR EYES GLAZE OVER
IT STRIPS THE FINANCIAL SPHERE OF SOME OF THE MYSTERY IT HAS BEEN CAREFULLY BUILDING AROUND ITSELF