Ten years ago, no one had heard of ‘apping’, and now because of WhatsApp it has become indispensable. We have changed the way we communicate and, as a result, added ‘apping’ to our vocabulary as a verb. And a new word is coming already: resharing.
Resharing will become the new ‘apping’ because resharing personal data will feel just as normal, easy and secure as communicating via WhatsApp. Technology makes it possible and legislation requires that consumers will be fully in charge of their personal data, regardless of where it is stored, by 2018. Banks and FinTech can play a key role in who gains access to personal (financial) data, who can use it, and who can add or reshare something. Resharing will become a new type of transaction service, this time not with money, but with personal data.
Customers want more control over personal data
The customer increasingly expects to be in charge of what channel and what product can be used and who can do what with his personal data. With banks and FinTech, this development is visible in the rise of ‘Open banking’ concepts.
To truly empower customers, organisations need to at least develop a data resharing strategy. Within that strategy, it should be established how they can facilitate their customers to reuse data from others in a simple and safe way, which data must be additionally stored, and how the stored data can be reshared. And all this must be processed in a safe and compliant way, as is customary with financial transaction services.
European legislation sets out two ‘Control centric’ frameworks, which have major implications for the ways in which the financial sector needs to handle personal information: Payment Service Directive 2 (PSD2) and General Data Protection Regulation (GDPR). The latter goes beyond financial data. GDPR provides even more control to customers with regard to personal data by imposing obligations on organisations in the areas of access, diligence, security, and the right to be forgotten.
Innopay, a consulting firm with offices in the Netherlands and Germany, was one of the first to publish about the potentially disruptive impact of PSD2 in 2013. Simply put, the result of PSD2 is that from 2018 onwards, customers will have more choice and more control with regard to apps of (licensed) third parties (TTP). Bank customers can then have the TTP, which does not need to be a bank, make payments, use information from their bank account, or have themselves identi ed with their bank information. Of course, only if customers give those third parties explicit permission for this by means of an information transaction.
Banks can play a hub role in resharing data
PSD2 and the emergence of FinTech may lead to fragmentation and uncertainty among consumers. They will probably opt for something they already know and trust: their own bank. They are accustomed to dealing with sensitive data due to strict customer identification (KYC) and antimoney laundering regulations (AML) and building a digital identity of their customers around that.
In our resharing vision, banks could play a hub role in society based on this digital identity in storing confidential data and facilitating resharing, which for example Dutch banks are already partially beginning to do with iDIN. When the hub role is enriched with FinTech solutions, with the bank as the de facto aggregator, the customer will have the opportunity to safely and simply reshare personal data, including their digital identity, and make use of the most innovative solutions on the market.
Cooperation between banks and FinTech in making resharing simpler
Innopay believes in the power of collaboration, especially in the digital world. Innopay has seen that collaboration in public transport, where the company is working on innovative alternatives alongside the Dutch OV-Chipcard, collaborating with ten carriers and Translink. Also, in the logistics sector, where we are working with major logistics parties to develop a trust infrastructure and simplify data sharing between businesses. In the financial sector, we see successful cooperation between banks in the areas of withdrawal, iDEAL, and iDIN.
Mutual collaboration is still rare among FinTech companies. Structural cooperation between banks and FinTech still seems more like a forced marriage, even though there clearly are mutual benefits. Applying Application Programming Interfaces (API) at an increasing scale not only ensures that resharing can happen in a more controlled and userfriendly way, but also allows completely new (Open banking) business and service models to emerge, because product and distribution strategies can be scalable.
To realise the full promise of resharing, the financial sector will have to work together on developing a joint vision on resharing. Only then can scale be achieved and can resharing data also lead to resharing (rights to) functionality in the long term. By sharing those rights, consumers can decide to have something or someone act on their behalf in the future. This opens the way to an ecosystem of smart ‘agents’ who will make the lives of consumers much easier. This way, sharing becomes multiplying, and resharing becomes the new ‘apping’.
An article from Shikko Nijland and Vincent Jansen, both partners at management consulting firm Innopay.