Data portability: Transforming the financial services industry
We live in a world of data and regulations, so it is not surprising that the two are having a large impact on each other and have fundamentally changed, and will continue to change, the financial services landscape.
Imagine a day in the not so distant future, when you are on the train on your way to work, you check a dashboard produced by an app on your phone that shows your spending patterns aggregated from all your bank accounts. It identifies that you are spending too much on entertainment and are falling short of your savings goal.
Fast-forward a couple of hours, and on your commute home from work you learn from a social media alert that a bank has a much higher interest rate on savings accounts than your current bank. You therefore use your mobile phone to go online and transfer your details and money in a matter of minutes to take advantage of the better deal.
This is data portability at its best. But how will it impact the financial services sector and how can we take advantage of this?
The changing faces of data portability
In the banking world, data portability is a concept that completely changes its appeal in accordance with which hat you are wearing.
From a client perspective, it opens a brave new world of services that don’t yet exist and the opportunity to easily and seamlessly switch to a service provider with the most attractive offer.
For FinTech companies, agile and innovative by definition, but still operating in the shadow of large corporate financial services organisations, it offers a window of opportunity to gain access to an enormous pool of historic data to which they can apply specific algorithms, giving insight into individual customers and services and ultimately enabling them to provide a more competitive service.
By contrast, for large financial services corporations, data portability is a can of worms that goes against everything the industry stands for: client data security before everything, Chinese walls and complete isolation of data from the outside world.
Impact of regulation
These contradictions are the result of a host of ambiguities regarding what exactly data portability is, how it is supposed to be implemented, and the ultimate issue of what is client data and who owns it? Such questions are rapidly moving from the philosophical realm into the real world as the newest data protection legislation, the EU General Data Protection Regulation (GDPR), is due to come into force in May 2018. GDPR clearly defines client data as data that helps directly or indirectly identify a client and swings the debate of ownership in a client’s favour. GDPR also mentions data portability as an individual’s right, but falls short of indicating exactly what it is and how it should be implemented.
Improved access to data will stimulate competition in the banking sector. Reports commissioned by HM Treasury and the Financial Conduct Authority (FCA) have been unanimous in saying that competition in the banking industry is severely hindered by the difficulties consumers experience in taking advantage of the offers of competitors. Data portability offers a solution to this issue, giving consumers the choice over who has access to their data.
Innovation is crucial
The question also arises as to what big banks and other organisations that sit on mountains of valuable client data need to do to prevent it from being snatched and used by competitors.
At Brickendon, our experience of working with a diverse range of clients over the years has shown us that innovation is the key to staying ahead of the curve. The situation is the same for the adoption of data portability - embrace it early and become the preferred destination when clients start hopping from one bank to another.
Organisations should be innovative in the way they mine data and come up with new services to offer to clients. They should become agile to the extent that they can quickly replicate and adopt appropriate innovations brought to the market by their competitors and should review their data models, untangle data infrastructure and update the governance policies to clearly separate client data from proprietary data owned by the bank.
The goal should be to make it as easy as possible for clients to choose who they bank with, but ensure they are not bound for life by that choice. This a very important aspect of the customer experience which will allow new and former clients to join (or re-join) the bank and be integrated easily into their system.
Back to the future
Bill Gates was quoted as saying: “banking is necessary, banks are not…” and there may have been more truth to his comments than anticipated.
The complexity of the road ahead is in effect a call to arms before the data portability issue officially hits the banking market with a tremendous surge of disruptive power. The role banks play in the future of banking remains ambiguous and to some extent in their own hands.
Going forward banks will need to employ top talent in areas such as regulation, data science, and agile transformation. It will ultimately be an exercise of working side-by- side with the client to produce a uniquely tailored approach to make the bank a top performer in an exciting, but ruthless and ever more competitive industry.
Nathan Snyder, Partner, Brickendon
Ireland is key launchpad for US expansion into Europe
The first transatlantic cable was laid between Newfoundland and Valentia Island in County Kerry, Ireland, in 1858. It was a flawed effort; the connection was poor, causing enough issues with efforts to send telegrams along it that major repair efforts were set underway immediately - efforts which ended up further damaging the cable line, severing the connection just three weeks later.
This first step towards transatlantic subsea communication, shaky as it was, laid the foundations of more than a century and a half of information exchange across the ocean, between the East Coast of North America and Western Ireland.
It’s been 163 years since the completion of the first transatlantic cable, an event which cemented Ireland’s position as the landing stage for subsea connections between Europe and the Americas. That position has, in no small way, been a driving force behind the country’s modern role as a landing stage for US and Canadian firms looking to do business in Europe.
Today, some of the largest firms in the world, like Pfizer, Janssen, Zurich, Metlife, Google and VmWare use Ireland for their European Headquarters. The combination of an English-speaking workforce (a boon made all the more important as Brexit makes the UK and the north of Ireland an increasingly complex environment that provides diminishing opportunities to access the rest of Europe), a cultural and regulatory landscape that welcomes foreign investment, and world-class connectivity makes the country an unparalleled choice for firms looking to establish a foothold in the EU.
As a result, Ireland has become one of the world’s leading data centre hubs.
Based on leading data centre firm Interxion’s Data Gravity Index, Dublin will be among the top five European cities that will contribute to Europe’s growth in data in the coming years, following London, Paris, Frankfurt and Amsterdam. The amount of data generated in Dublin itself is expected to grow alongside its economic expansion, with the Data Gravity Index also predicting that Dublin will outpace cities and data centre hubs like Mexico City, São Paulo, and even Shanghai, to be among the top 20 cities to experience annual data growth by 2024.
Ireland ranks 6th in the 2020 EU Digital Economy and Society Index (DESI), meaning that it is among the leading ranks of EU Member States in terms of the uptake and use of digital technologies. Likewise, the trend to locate data centres in Ireland serving overseas clients will continue to generate increasing amounts of international traffic
Managing the Dublin Data Boom
According to Interxion, subsea connectivity will continue to play a massive role in helping both international and domestic organisations digitally transform themselves to meet the challenges of changing markets post pandemic.
As the pace of global digital transformation - and the subsequent need for more connectivity - accelerates like never before, this rapidly developing world is driving urther demand for these cables as individuals and organisations become increasingly reliant on subsea cable’s exceptional data speed and capacity.
According to experts at Interxion, this connectivity will be pivotal to Ireland’s continued success in attracting international companies in the technology, pharmaceutical and financial sectors.
The subsea cable industry is a key contributor to the Irish economy across many sectors. The draft National Marine Planning Framework reported that subsea international networks make Ireland an attractive region for investment for the technology and digital sectors. Telegeography states that there are twelve existing subsea cables connecting Ireland to the US and UK, and a further four systems are under development. The Iish government’s statement on the Role of Data Centres in Ireland’s Enterprise Strategy identified Ireland as a location of choice for many different sectors reliant on digital and telecommunications capabilities, all of which in turn rely on subsea cable interconnectivity.
Subsea cables are of strategic importance to Ireland’s future as a catalyst for economic and societal prosperity. Ireland can be the ideal location for your company’s expansion plans. To find out how, you can hear from leading experts throughout the data centre and digital infrastructure industries on June 15, 2021, as speakers from the IDA, Aqua Comms, GTT Communications, euNetworks and Interxion discuss subsea cabling, digital transformation, Data Gravity and the fate of Ireland’s digital economy.
Key topics will include:
- Key facts about existing subsea infrastructure,
- Future plans,
- Challenges (including Marine Maintenance) and opportunities,
- Terrestrial networks (demand vs supply);
- Ireland's role as a gateway to Europe
The virtual panel (which is taking place between 10:30 PM - 11:30 PM JST on June 15, 2021) will conclude with a 20 minute Q&A. Mike Hollands, Senior Director of Market Development at Interxion, will moderate the event.