Banks have historically been the guardians of customer information, but that has started to change with open banking; opening up information to third parties via customers has led banks to think more and more about security breaches; Now it’s not just about building a wall and not letting anyone in,” said Ram Bose, global retail banking consulting leader at Genpact, to TearSheet. “It’s about building a filter or strainer that lets some things in or out and not other things.”; the UK has regulations that mandate the sharing of info but the US has only set out standards and banks have been doing one off deals; new technologies like AI and machine learning can help to better secure agreements when banks are working with 20 or more potential partners; it is early days but banks can help to set up the standards they use by working together with fintechs and regulators. Source.
data sharing
Third party data sharing is becoming more prevalent in financial services as fintech providers increasingly provide more personal financial management solutions. In Europe the Revised Payment Services Directive (PSD2) is also revolutionizing data sharing for the fintech market.
American Banker provides insight on the pros and cons of data sharing also including insight from Wells Fargo and JPMorgan, who have developed leading data sharing partnerships and solutions. While the majority of the challenges to data sharing are refuted by technology experts there are a number of considerations that have limited the data sharing process.
Some of banks' leading concerns for data sharing include connectivity risks, system overloads and differing regulatory standards. Data can be affected when transferred to a third party, it can be difficult to determine data being extracted and system updates can affect data flow. Banks have also reported system overloads from data extractions at peak hours. Additionally, banks report that differing regulatory controls and standards can cause security risks when working with third party data aggregators. Source
