Data Privacy Fintech

Why personal data is at the forefront of a banking revolution

With GDPR looming, a revolution in personal data is occurring, one which puts the individual front and centre of how their data is used, and by whom.

As consented data use becomes both a legal necessity and the default for online interactions, previously closed systems such as banking and health are set to open up with the possibilities personalisation brings – with benefits to all.

We’ve already written about the huge potential for patient centricity in healthcare, using consented data and the associated personal insights and targeted treatment this can bring. But banking, too, is ripe for an overhaul.

As ever with personal data use, the key here is trust. Banks are largely institutions that are overwhelming trusted. We have to be believe in them to keep our money and very confidential transactions around that safe, and they do just that.

But banks are also very old-fashioned, built on a branch model that has hardly changed in decades. With Open Banking regulations widening who can provide financial services, as well as an increasing shift to digital payments in many forms, they need to move with the times or get left behind. But their platforms are not built on being digital first and agile, making the creation of data-driven services a challenge for most.

And that’s before you take into account that the more payments that happen away from the bank, on PayPal or Amazon, for example, the less information the bank has about its customers and how they spend. Their customer data sets run the risk of becoming degraded and less useful to everyone, including the bank itself.

Newer fintech companies, or those such as offering new and exciting financial capabilities as part of a raft of services based on consented access to personal data, have the innovation to excite and expand banking services. But they don’t, initially, necessarily have the legacy of trust needed by consumers to grant them access to highly sensitive financial data, even when it is to designed to personalise services. Consumers need to understand the value of sharing this data as part of the journey to building trust.

To be successful these newer companies need to work with the banks, however loosely, to access both the data those banks hold and leverage the historical relationship with their customers for the benefit of all parties.

This makes a collaboration, taking the best of both the old and the new, the best way forward.

And it means, in effect, the whole notion of what is a bank is up for grabs. Financial services will recentre around the individual. They, in turn, will be able to use their banks as it suits them, bolting on services like to enrich that experience and make it deeper.

The consumer is in control here, cherry-picking the services that fit best with their individual needs, and sharing their data only with brands or organisations that they trust.

And the more they share, the better the services open to them get. It really is a true win-win situation for all.