Creating value through sharing data
Posted on 30/08/2019
Enabling better access to data is an issue that Innovate UK is addressing by investing up to £3.5 million to develop responsible access or sharing methods within accountancy, insurance and legal services. Individuals are now invited to apply on behalf of their organisations to take part in a 3-day residential Innovation Lab to be held on the 14th-16th October at Stanbrook Abbey Hotel in Worcester. Selected participants will work together to develop collaborative proposals for research and innovation projects. You can read more about the competition and apply to take part in the Innovation Lab here.
Innovate UK, part of UK Research and Innovation (UKRi) is just one of many organisations including the Open Data Institute (ODI) and the Alan Turing Institute currently working to develop the knowledge, standards, tools and services that will drive a step change in the UK’s AI capabilities and create a competitive edge.
The AI sector will only thrive if it has access to data but, as the ODI report The role of data in AI Business Models explains “an AI sector beset by monopolies and the widespread siloing of crucial data stifles innovation”. Sharing data requires informed and strategic decision making, especially for legal, accountancy and insurance companies whose data may also be the source of their competitive advantage.
“Data access is an issue that comes up in every single sector and everyone needs to share. So says ODI Jeni Tennison who sees current constraints as being largely cultural rather than technical: “There is still a lot of fear and risk aversion. Businesses have been told that data is the new oil and their response is to keep it closed – which sometimes is a sensible, good thing – but the key is for businesses to see real benefits, some sort of return on investment or quid pro quo for sharing and these are not always easy to see. At the ODI we often find it useful to look back at old models, such as credit reference agencies, where sharing is now the norm and there is a clear and useful business model for customers and professionals.”
Tennison feels that more strategic thinking and ambition is needed across the board. “In the UK we are ahead of the curve in thinking up good, well-governed models for accessing data and we must continue this work to avoid being swamped by US models.”
Learning from the UK’s Open Banking model
While it took several years to get under way, Open Banking is now setting the pace for other professional sectors. One company successfully building innovative Open Banking products is The ID Co. and Content Marketing Executive Kenny Pattie explained to us how rapid growth happened once businesses could see real benefits in the concept.
“Open Banking went live in the UK in January 2018. At that time, there were only a handful of third-party providers like us who were registered with the FCA. In the eighteen months or so since that point, the volume of growth in both registered providers and the monthly increase in API calls made through Open Banking has been nothing short of stratospheric.
“It is my opinion that when Open Banking was made live there was a dearth of understanding on how it could be used. It was viewed as a way for consumers to see all their accounts in one place (which it clearly can) and little else. There was no focus on how financial institutions could use it to their advantage.
“Alongside industry bodies and other stakeholders, companies such as ours have worked hard to engage with the market, to inform and educate on the use-cases associated with Open Banking. And make no mistake, these use-cases are extensive – both on the consumer and the industry side.
“There’s no question now that the banks and other regulated bodies have a far better understanding of how they can benefit from Open Banking. Naturally, that has made our conversations with them much easier. They understand that there is no going back to the old ways. Screen scraping (a way of retrieving customer account information by posing as the customer with their log-in details) will shortly be made redundant, Open Banking is the way forward.”
Once companies can see the possibilities they start to feel more comfortable about sharing in order to meet customer needs, provide a better service and reduce costs. Jeni Tennison points out that sharing data is vital in “just making it easier for customers to interact with multiple services, when applying for a mortgage or getting insurance for example, making the experience smoother and more accurate – this is of benefit to all. With Open Banking it is interesting to see that activity is not so much new banking products but improved existing ones. New products can be delivered in real-time – one of my favourites is that you can now buy time-limited drone flight insurance online easily on the day – it’s simple and this is all about capability and reducing the costs of transactions.”
Consumers, as well as businesses, are taking time to grasp the value of services like Open Banking and Pattie sees a continuing need for marketing the benefits to consumers. “The overarching principle of the banking industry over the last twenty years has been security. Now we’re told that Open Banking is safe even though in effect it offers companies an opportunity to view (parts of) your bank statements. How could this not be terrifying for customers?
“Again, what we and other companies are doing is to educate users about how safe Open Banking is. Without getting into the technical requirements, it’s far safer than screen scraping because you log in to your bank account, and no one ever sees your log-in details while screen scraping gives out your credentials and a bot poses as you. There’s a discussion to be had about convenience versus security as well. Contactless is clearly less secure than chip and pin, but we the public, embrace it. Why? The savings in time that we make at the check out. It’s convenient. As consumers get used to Open Banking, they’ll see the convenience that it affords them, and embrace it.”
Openness creates opportunities
The opportunities for consumers and those financial institutions that are willing to grasp the nettle are limitless and Kenny Pattie is excited about the possibilities: “There are a number of developments that I look forward to seeing also that have yet to be rolled out. Currently, Open Banking only applies to current accounts. Other jurisdictions have gone much further with credit cards, insurance, mortgages and more. The Australian example, where they have rolled in Open Banking into the Consumer Data Rights legislation is probably the most exciting. This will cover everything from banking, utilities, mortgages and more. In time we’ll see this in the UK and it will be hugely exciting.”
There are lessons that other sectors can learn from the Open Banking experience, as Pattie confirms: “It’s only a matter of time before Open Banking – possibly through another name such as ‘Open Data’ or ‘Open Finance’ – will become the norm in other sectors. What is required is a further public service information, widening the mandate to include other sectors, and the ability for banks to profit through commercial APIs.
“In the last month, I’ve read a blog from MacMillan Cancer Trust and Third Sector News on how Open Banking can be used in helping cancer survivors and in the charitable sector, so without question, use-cases are already appearing in other markets. In the legal sector for example, it is possible that tech such as Distributed Ledger (Blockchain), AI and Robotic Process Automation (RPI) will also have a massive impact. We need to think about how different forms of technology can work together to enhance the customer experience and help companies save time and resources.”
Innovation in AI services promises to transform the internal processes for legal, insurance and accountancy professions. The ODI’s Jeni Tennnison points to “opportunities in terms of a new dynamism, bringing the innovative spirit into staid professions and institutions. Many services being developed in fintech are being targeted at the smartphone generation but I can see a huge opportunity in providing apps that will assist those who provide services to others, especially accountants.” She also foresees exciting possibilities in solving really big problems “bringing businesses together where the sum of sharing the data is HUGE – greater than the sum of the whole.”
Collaboration overcomes continuing challenges
It is still early days for Open Banking but there is real energy behind its growth which is bringing all those involved with governance, policy, infrastructure and innovation together to find solutions, set standards and move forward. Kenny Pattie cites an example of a technical challenge on the banking side where “it’s well known that some of the APIs that have been built by the banks have not been of the standard required. The OBIE has been vocal on this subject and requirements put in place to ensure there is no further issues.”
Another key challenge is the issue of ethics and trust – something we will be focusing on in our next article. Jeni Tennison feels that all professional sectors “need to pay more attention to good access and ways that are more trustworthy. How do we retain trust when data is being shared? Transparency is all very well but it is TRUST that is vital”
In the spirit of collaboration the AI for Services network is a new initiative bringing together service professionals, researchers, technologists and entrepreneurs who are developing AI and new data-powered solutions in the accountancy, legal, insurance and financial sectors. To find out more just sign up here.