There has been much debate recently about the use of open data in financial services, with government and industry alike weighing in on innovation, data ownership, privacy and related issues.
From the fintech perspective, greater access to data has the potential to spark innovation and stimulate greater competition in the market. On the other side of the coin, traditional players have voiced concerns around customer security and privacy.
We’re all aware of the importance of data protection. But, when talking about open data, it’s necessary to distinguish between customer information that should not be shared for regulatory and privacy reasons and customer information that, by sharing, could result in direct benefits for that customer.
The use of open data in Comprehensive Credit Reporting is a clear example of how sharing information can deliver positive customer outcomes.
Historically, Australia has lagged behind other OECD countries in terms of credit reporting, relying until 2014 on ‘negative’ credit indicators such as historical defaults or missed payments. In lending assessments, this emphasis on negative data reduced the chances of an applicant’s mortgage being approved if they had an imperfect credit history (even if they changed their credit behaviour for the better in later years).
Following the introduction of Comprehensive Credit Reporting, lenders now have access to broader data sources, and this allows them to take into account ‘positive’ credit behaviour to form a more balanced customer view. It’s innovation such as this, say the government and fintechs, that has a positive impact on customers and the financial ecosystem as a whole.
Open access to data allows us to discover trends and makes it easier to benchmark across comparable jurisdictions. It provides us with the stimulus to be predictive, and channel these insights towards delivering better outcomes for customers.
Fluid sharing of data is where the world is heading, so it makes sense to leverage this for customer benefit.
At a time when consumers value ease in financial management, and fintechs are all too eager to innovate in this space, it’s likely that open data will remain at the forefront of the innovation debate for some time.