The future of fintech will be heavily reliant on the collaboration of all the different entities involved in financial operations, necessitating open data sharing among all stakeholders involved.
Fintech continues to grow in an age where cash and other traditional forms of payment are slowly but surely going out of relevance. With a pandemic around, everyone’s reliance on digitized payments has increased even further. Throughout these existing socially-distant months, fintech has helped governments protect their citizens and corporations from the ravages of COVID-19 to a certain degree. Therefore, regardless of the type of business you run, the future of fintech should matter to you.
Fintech refers to the use of technologies like AI, RPA and blockchain extensively to digitize and optimize transactions and other financial operations. Fintech tools based on these technologies need a continuous stream of diverse and accurate data to function optimally and offer the best services to customers.
Open data is the concept of free, reusable, redistributable data that is not owned by any particular entity and without copyright restrictions. The concept of open data is vital for the growth and future of fintech for several reasons, including:
Improving Fintech Cybersecurity
In a 2020 study, it was found that 98% of the top 100 fintech companies were vulnerable to cyber-attacks. The same study found that all fintech companies, at some point, have suffered security and privacy issues related to APIs, web applications or subdomains. Fintech ecosystems are complex and challenging when it comes to managing data security due to the breadth of their scope. While standard cybersecurity tools and applications can be effective up to a point, they would be unable to protect all the devices or applications and the vast financial data that keeps circulating and changing within. Additionally, cyber-criminals find ways to share resources within themselves and learn new methods to launch attacks on your fintech architecture, while organizations often attempt to counter the threats on their own. That trend may change with the emergence of Information Sharing and Analysis Centers (ISACs). ISACs facilitate collaboration between different organizations for sharing relevant and actionable data about different cyber threats and the ways in which they can be dealt with. ISACs consist of forums where the cybersecurity managers of different organizations can discuss data security policies to thwart cyber-attacks.
Businesses can benefit from using a single shared platform for data security analytics rather than independently trying to plug different holes when an attack hits. Open data allows you to create a standard process for threat analytics so that your data science team and security team can collaborate to thwart complex cyber-attacks.
Using Open Banking to Improve Services
Some of the most renowned banks in the world have lately embraced the concept of “open bank data.” Open banking involves banks sharing confidential consumer information—transactional data, personal bank account details—with third-party business partners through open APIs. These companies can then design apps to improve consumers’ banking experience. There is an added element of risk in the process as the data is shared with a number of parties. Despite the risk, open data sharing enables you to widen your scope of operations and dabble into unchartered sectors.
The ultimate goal for all businesses is always to provide greater convenience and value to customers so that greater revenues can be gained. Open data makes collaboration easier in fintech, enabling businesses to achieve that goal. Therefore, open data is certainly invaluable for the future of fintech.
