As governments around the world rush to set deadlines outlawing the use of the combustion engine, many car enthusiasts, myself included, feel a slight sadness that future generations will not experience the thrill and rawness of a powerful traditional sports car. Having followed F1 for some 30 years I have witnessed the emasculation of those beautiful V12s of the Senna, Mansell and Prost era, to the relatively quiet 1.6 litre turbo engines with hybrid assistance. It’s not something you can easily covey at the circuit to your 15 year old son, its something which had to be heard and felt as those sound waves reverberated through your body.
But as the owner of a fintech business I realise as much as anyone that progress is inevitable and indeed in most cases desirable. Yes, we will lose that rawness, but we and our children will also breathe cleaner air and go some way to saving our planet. Not to mention the fact that the oil will one day run out and we need to move beyond that dependency.
But of course, I’m not really here to talk about my nostalgic view of the motor car, but I am going to talk oil! Of sorts. As the Executive Vice President of the multi-billion dollar Gartner Inc, Peter Sondergaard once said
Information is the oil of the 21st century and analytics is the combustion engine
and if you stop and think for a moment to contemplate this remark, you will quickly realise that in so many ways this is indeed one of the most insightful comments uttered in recent history. Almost without exception the high growth business and innovative developments are involved in either the supply or the consumption of data and data-led intelligence.
But this new normality is nothing new, we have witnessed it happening before our eyes for many years. What is relatively new however is the raft of new regulation catching up with the technical revolution which seeks to control the ownership and use of the data.
One of the most significant and seismic manifestations of this trend is the impending launch of Open Banking in January 2018, that’s just 3 months away from the publication date of this article. For those of you who have not been following this process, here are a few headlines.
- The Competition and Markets Authority requires the top 9 UK banks to make Open Banking APIs available to 3rd parties by January 13th 2018
- Multiple suppliers will be offering products which access customer bank data for a myriad of products and services.
- Investment in this sector is huge and there will be significant innovation from the very beginning of the Open Banking launch.
- If you are involved in any industry which uses Credit Reference Data to underwrite your customer’s creditworthiness, you will need to engage with Open Banking products, your competitors certainly will!
“But why will this impact MY business?” I hear you ask. Well, let me give you a few examples.
- If you advance credit of any type, how do you currently assess affordability and how does your current method compare to having a front row view of your customer’s bank statements?
- Do you need credit reports but cannot access them because you are not able to reciprocate? If so, Open Banking may be your answer.
- If your competitors are underwriting more effectively because they access Open Banking, how will that impact on your competitiveness in terms of credit performance and risk based pricing?
- If you operate an automated decisioning process at present, have you or your service provider even thought about or prepared to integrate with Open Banking?
The open banking principles are being introduced in many other countries around the world, including mainland Europe and Australia. This is therefore just the beginning of what will surely turn out to be a financial data revolution. The question is, are your prepared for the journey ahead and have you checked your oil?
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