To maximise the benefits of Open Finance and other similar initiatives, the government and regulators must take steps to put real power in the hands of individuals, create meaningful protection from harm, and shape the market to encourage the development of products and services with a social purpose.
Open Finance may help to address some of the biggest challenges facing society, such as the climate crisis and the fallout from COVID-19. As millions are experiencing financial hardship, we need to better understand how data sharing could support debt advice services to reach and help the record numbers of people facing problem debt, and how open finance could support the responsible finance sector, including credit unions, to grow and flourish. Using Open Finance, communities of people could pool their data and build their collective power to bargain for cheaper services or increased benefits. And new services might be developed that allow people to identify – quickly and easily – where their money is invested so they can choose products that are more aligned with their values. A survey in September 2020 found that two thirds of savers are unaware of the carbon footprint of their pension pot.
There is no shortage of excitement inside government about the transformative potential of data. The National Data Strategy released in September 2020 lauds its potential to boost productivity, create jobs, advance scientific research, improve public service delivery and create a fairer society. Meanwhile, the new cross-government Smart Data Working Group is supporting the development and delivery of infrastructure and standards that allow data from a variety of sectors of the economy to be shared and acted upon, for the benefit of consumers, including vulnerable ones.
The fact that the government is taking a strategic approach towards realising data’s potential – and considering issues of fairness and inclusion as it does so – is welcome. As the uptake of Open Banking continues to rise, and the rollout of Open Finance begins, we are entering a critical period. Ministers and regulatory chiefs must be under no illusions about the level of intervention it will take to make these initiatives a success. They must be prepared to step in to shape the market in a way that is unprecedented and perhaps uncomfortable.
That means working with consumer organisations and civil society groups to understand the real-world benefits that data sharing in finance can deliver. It means providing support and funding for organisations which are developing products with a social purpose and that have business, governance and ownership models that challenge that extractive and manipulative nature of the platforms of surveillance capitalism. And it means understanding where there is a risk of people experiencing harm, adapting regulation in real-time as the impacts on individuals and communities become clear.
There’s a lot we don’t know about how the data revolution will unfold. Only time will tell what new ideas emerge, how consumers and society respond to them, and what unintended consequences flow from people’s changing behaviour. What we do know is that over the past two decades, the governments’ hands-off approach to the data economy has been disastrous. Hopefully, as data-sharing in finance gathers pace, we are now turning a corner.