Source: paymentssource.com
Information is power. That’s why “big data” has been a central pillar in the massive digital disruptions we’ve seen across industries.
Organizations of all sizes are using data to enhance business productivity and improve customer engagements. And now, individuals and families can receive the same benefits from their data, particularly when it comes to their finances. Access to personal banking data can empower consumers to better manage their money and make more informed financial decisions.
The challenge has been aligning the data-sharing ecosystem in a way that simplifies access and enhances consumer control while simultaneously ensuring a high level of security. Today’s information landscape is fraught with fears about data breaches and the potential misuse of personal information. As a result, financial institutions maintain a heightened awareness about sharing consumer data with third-party apps and services, even when consumers request it.
Financial institutions’ reticence to share data with third parties is understandable. These institutions depend on consumer trust to do business and are wary of jeopardizing that trust due to a data breach. But when there isn’t a free flow of personal finance data, consumers lose out. In a recent Pew Research report 72% of Americans say they personally benefit very little or not at all from the data companies hold.
Access to personal financial data can help consumers improve spending habits, find the right financial products and invest smarter. By sharing this data with reputable third-party applications, consumers can establish more realistic budgets, expedite the loan process, authenticate bank accounts for instant payments and obtain more accurate credit scores.
Consumer financial empowerment relies on the right to access, share and control personal data. But ecosystem players, from financial institutions to data agents to fintechs, must work together to provide consumers access, control, transparency and traceability:
Enable customers to share their data securely with third parties. Consumer data resides in a variety of locations, including banking, payroll, tax, insurance and investment apps and services. Industry-led coalitions like the Financial Data Exchange (FDX) are essential to realizing the vision of a simple, comprehensive and secure data sharing ecosystem.
Provide visibility and control for customers to manage data access partners. Consumers should be able to easily view which parties have access to their financial information and how they use it. Additionally, opting in and out of data sharing should be as simple as clicking a button. Fortunately, we’re starting to see some data providers (such as banks) provide dashboards for their customers. But these controls must continue to evolve to ensure a simplified and streamlined process for consumers.
Position data-sharing details front and center. Key elements of data permissioning should be made immediately and explicitly clear as soon as a new consumer engages with an app or service. Sixty-three percent of Americans say they understand very little or nothing at all about data privacy laws and regulations. Information on data rights should be comprehensive yet concise — not buried in the dense terminology of service agreements or hidden in website privacy policies. Use plain language, avoid complex jargon and simplify data concepts, where possible.
Ultimately, every financial institution and fintech aims to help its customers succeed financially. And with access to their personal data and control over how they can use it, consumers are able to make more informed financial decisions. A more open and inclusive financial system enables everyone to improve their financial health.