The Promise of Open Financial Data
Establishing and expanding digital financial data-sharing systems presents complex technical and regulatory challenges. But secure and trusted schemes also offer a large potential upside for consumers, financial institutions, and the economy.
SAN FRANCISCO – From Australia and Brazil to Nigeria and the United States, countries are putting in place new guidelines and regulations governing the digital sharing of financial data. The aim is to spur the creation of digital-data ecosystems that smooth and speed interactions between financial institutions and their individual and corporate customers. But successful adoption of open financial data could also provide a broader boost to global GDP.
By enabling customer data to flow frictionlessly between financial institutions through application programming interfaces (APIs), open-data systems reduce or remove the need for manual data processing. Strong consumer trust is the essential prerequisite for such a system. That can be secured only by establishing a protective cushion of user consent, data protection, and cybersecurity.
With safeguards in place, the benefits can be significant. Individuals and small businesses can gain increased access to financial services; for example, data showing that a customer with a thin credit file reliably pays utility, rent, and other bills can improve their chances of receiving a loan, sometimes for the first time.
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