Currently, Europe is being seen as the role model for Open Banking. Incumbents like banks are obliged to open up and provide access to the data of their customers. A trend which might have happened even without a regulatory requirement as well, but definitely a lot slower (yes even slower than the development of PSD2…). In the years after PSD2 it is likely that other financial accounts will be opened up by banks for third parties as well. But is connectivity to these financial accounts the only barrier which is avoiding innovation from happening in this industry? I believe that opening up is one step, but probably an even more important one is to increase quality of our financial data.
With Open Banking our financial footprints are available to every third party provider and they can finally make use of our financial data which was kept in silos before. But how much value does this data provide if understanding and analysing this data requires massive efforts? Especially our historical bank account transaction data was not designed for today’s time and the data points it contains might make it possible to determine a category of the transaction, for example the yearly 100EUR payment transaction with Allianz can be categorised as an insurance expense (e.g. figo tagger), however, keep in mind that financial data could contain so much more value. Instead of knowing a certain transaction was an insurance fee, details about the insurance (type of insurance, signing date, expiry date etc.) and the payment (yearly or quarterly fee, one insurance or more etc.) could be included. This does not only apply to insurance fees but also transactions with Amazon shopping, all subscriptions, child expenses and so many more.
When we are looking at the opportunities of Open Banking, it is quite obvious that getting access is a first step. But besides normal PFM solutions, nearly all new services need to access the financial account in order to obtain answers to certain questions and not just the unstructured data we all know from our online banking. In the future, banks should obtain a competitive advantage thanks to better data quality so they offer real XS2A: Access to Answers.