A Personal Data Bottleneck for Open Banking

A Personal Data Bottleneck for Open Banking

New working paper discusses how property rights can address this critical issue

The Open Banking initiative has been introduced to help consumers benefit from better financial products and services. Since coming into force in the UK on January 2018, with similar initiatives being adopted and implemented at various forms and stages around the world, there is much conversation around the need to break barriers that are impeding the successful adoption of Open Banking.

This includes a critical personal data bottleneck which Dataswyft CEO Irene Ng and King’s College London visiting research fellow Carlos Canon discuss in a recent Warwick University working paper. Realigning property rights on personal data with individuals could help address this bottleneck, they write, because it allows individuals to monitor, administer and understand their compensations from having third parties use their data under Open Banking. 

The working paper also presents the HAT decentralised technology (on which Dataswyft’s Personal Data Account infrastructure is built) as a solution to overcoming this bottleneck.

Read more in the full paper: A Bottleneck for Open Banking.


What is Open Banking?

Investopedia describes Open Banking as ‘open bank data’; a practice that allows third-party financial service providers to access consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of APIs (application programming interfaces). It is seen as a driving force of innovation in the banking industry, enabling financial services consumers to securely share their financial data with other financial institutions for better products and services.  

Why Open Banking? 

It’s one of the remedies proposed by the UK’s Competition and Markets Authority (CMA) to address the lack of competition and innovation among the UK’s older, larger banks and the challenges smaller and newer banks faced in trying to grow and access the market (captured in CMA’s 2016 report on the UK’s retail banking market), which has resulted in higher pricing for products and services as well as significant costs to switch banks. Open Banking is expected to revolutionise relationships between financial institutions and their consumers.  

How does Open Banking benefit consumers?

According to Open Banking Limited, the Implementation Entity created by the CMA to deliver Open Banking in the UK, Open Banking enables new ways for consumers to manage their money and find financial products and services that deliver better outcomes, from being able to see all their accounts in one place to having credit scores that more accurately reflect who they are, and even safeguarding the financially vulnerable. More info for consumers at openbanking.org.uk’s FAQ page.

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