You own the data about your use of financial services. Yes, everything: the transaction details, the data collected on usage, the data you give to a provider to offer a quote, you own the lot.
The financial service provider can process your data and, in many cases, has to keep data for a period to support their legal duty to preserve their books and records. However, the data is yours.
The tricky bit is using the data you own.
Your ownership rights are clear, however using your asset is tricky. Try asking a bank for the data they have about you and you might get 100 pages of computer print-out. This is not useful.
But Open Banking has shown us the way. By forcing the banks to participate in Open Banking, the Competition and Markets Authority, CMA, has pioneered the way for citizens to make better use of their data, as processed by banks.
With your permission, given after your bank has verified who you are, your bank can now automatically share transaction data with authorised third parties. This allows, for example, smart phone apps to provide views of your accounts across different banks, automatic submission of bank data when applying for loans, debt advisors to get a detailed picture of your accounts as well as a range of other services.
In implementing Open Banking, the UK has become a world leader in showing how technology can find innovative ways to help people with their bank finances and improve financial literacy and well-being.
Open Banking is great, but it is not enough
The lessons from the implementation of Open Banking are applicable to the whole financial sector (and probably beyond). Some of what Open Banking has created can be directly re-used by other financial sectors. However, there will be work, sector by sector, to establish the standards for the products unique to each sector.
The re-use should be easy. Open Banking has shown how to create, and is operating, a re-usable secure mechanism for computer communication between authorised firms. It has already established how to verify users and empower them to give consent for the use of their data.
The product standards for current and savings accounts and shortly card accounts are done.
In banking, this work happened because the CMA drove the process, and it recommended that an extension of Open Banking to insurance, savings and mortgages should be explored.
So who will drive in the standard setting in the other sectors?
Re-use the expertise of the Open Banking Implementation Authority
It was quite an uphill struggle to implement Open Banking, both technically and culturally. Many lessons were learned about what is needed for good standards, the guidance needed to support those standards, and the need to balance the interests of established players and new entrants.
This experience was hard won and should be re-used. Sector leaders should be queuing up to work out how to have standards set for their sectors.
Developing the debate about Open Finance is a priority for the FCA this year. Hopefully, the finance sector will be eager participants and will not wait to be pushed.