According to the World Economic Forum, the global data market could be worth half a trillion dollars by 2024. With data being measured and regulated more closely than ever before, what does this mean for banking culture? Sarah Lowther investigates the challenges and opportunities presented by this new data-driven era.
Data has become the single most valuable asset not only of banks, but of their customers,” says Daniel Meere, MD of global management consulting firm Axis Corporate. “It also defines how a regulator views a bank under its supervision.” Data on customers has become as valuable as the customers themselves, adds Meere, and the rise of the data-specific banking roles, such as CDO and CISO, and the emphasis placed on data governance and security, is part of the focus on protecting, preserving and policing customer information and privacy.
New personnel appointments are just some of the responses to the data regulation changes this year. GDPR has revolutionised the way companies protect customer data, and Open Banking, in the form of the Second Payment Services Directive (PSD2), is financial services-specific, instructing banks to make customers’ financial data shareable with trusted third parties if, and only if, the consumer gives permission.
EXPLORING THE SUPER-APP UNIVERSE
With a billion monthly active users, social and commercial app WeChat is expanding its payment platform beyond China. What can the UK banking industry learn from this Asian digital ecosystem
Daniel Meere, Axis Corporate, observes the marketplace banking concept in Europe is now piecing together the collective drive for frictionless transactions, customer choice and better technology. In the UK, he adds, “The Open Banking standards have pushed this concept. Banks are finding their underpressure business models can use the marketplace to generate new sources of revenue through better use of data – matching customers to relevant products, filling gaps in their product offering and tailoring pricing based on better insights. As the sun sets on legacy systems, the smart-app future in financial ecosystems looks bright.”
A NEW PARADIGM AND MINDSET CHANGE
Ecosystems rely on strong partnerships based on an alignment of objectives, robust standards and interoperability. “This is a completely new paradigm for banks,” adds Meere. “They are used to being ‘owner/ operators’ of their own infrastructure and building in-house rather than buying in from the external market. The question is, can a bank truly be assured that it is better than the leading technology firms at their own game?” The change in mindset required is significant, argues Meere, which explains the delay in uptake.
The Chartered Banker, on a bi-monthly basis. We feature profiles on prominent figures in the sector and investigate key issues, both in the UK and globally. We cover all relevant Institute and sector news and offer focused reports to understanding of wider banking matters.