The Open Banking Standard, which I co-chaired the development of, started to roll out on 13 Jan 2018.
Creating open APIs is part of the fundamental wiring of our financial Data Infrastructure.
It may sound less interesting but, to me, it’s much more interesting and impactful that crypto/blockchain will be in the coming years.
In fact, getting this wiring right (open APIs) across sectors is a foundation that will help new technologies, such as AI, Machine Learning, Blockchain, et al, have access to the very data they need in order to be useful.
I’ve been building business using open APIs for over a decade and helping unpick (open, shared and closed) data licensing for over 20 years. Sorting out open APIs, clear data licensing, policy, liability, business models, communications and standards in both regulated and unregulated environments will help maximise fair free-market behaviours. It will enable both the centralisation and the decentralisation of power (as opposed to the status quo, which only acts to centralise); minimise the risk of bias (e.g. AI only having access to ‘biased’ datasets); provide the potential for greater scrutiny by state and non-state actors; shine the right kinds of lights on privacy and security; and engage in better conversations about what we actually need (and want).
The Open Banking Standard isn’t about technology: in fact a small part of it is about technical standards. It is the principle of open access to licensed data that changes the conversation. It requires collective thought and action to bring together commercial and non-commercial needs: country, business and social impact in sustainable legal frameworks that somehow balance the needs of innovation and protecting us from ourselves.
The potential benefits of open banking are substantial: improved customer experience, new revenue streams, and a sustainable service model for traditionally underserved markets. Although the core API value proposition lies in streamlining the systems integration required for data access, the need for guardrails to support protections for the privacy and security of personal data create a formidable infrastructure challenge.
As to what happens next, to quote a recent American Banker article;
To get ahead of the issue, banks in the U.S. should invest in broad customer outreach campaigns that explain what open banking is and what it means for customers, including the new types of services and experiences it will enable for them. Most importantly, those campaigns will need to clearly communicate the ways a bank is ensuring that customers’ data is shared securely to mitigate fraud and identity theft risks.
We will have more news on what Dgen is doing on Open Banking soon as we develop a range of services to help move things forward.
