1 October 2020
‘A single European Data Market is clearly the way forward’
The European Commission has recently published a European Strategy for Data that will require companies, governments and other organisations to allow the sharing of their customers’ data – if the customer approves. Previously, only banks were forced to open up data and payments to others.
Today, a more level playing field is being built which is fairer across all industries and will enable totally new services for business and citizens. One may see it as the next level after PSD2 (opening up customers’ data at banks) and GDPR (enabling data sharing between all institutions). According to Michael Salmony, Executive Adviser at equensWorldline, this will change the entire economy just like the banking world is currently changing as a result of new digital services. “This liberates data from corporate silos. Data is the new sunshine – if used right, and under fair terms, it sheds light, it is reusable, it is virtually unlimited and will power many new areas.”
The customer – not the corporation holding the data – will have full control. Unleashing the enormous power of third-party creativity – just as in the existing app stores – across all industries will be a revolution, comparable with the move from the Nokia to the iPhone. In this blog, Salmony gives some insights on what may happen in the next few years, what impact these changes may have on the finance and wider data economy and explores some of the prerequisites that must be put in place.
Where are we standing in regard to an open data economy?
Salmony: “The open data economy is already here – your location is being shared with your Uber driver, your address with Amazon’s delivery van, your proof-of-age with your wine merchant, your card data with your airline booking system and your PayPal account with Netflix. However, for the user it often feels he is no longer in control of the data (who is seeing what of my data? What data has been passed on to whom? How can I revoke a data access?).
Also, there is a great market asymmetry in that some huge platforms have siloed enormous amounts of data, whereas potential new, nimble competitors find they can never even enter the market: who would use a new social media tool that does not connect to my friends? Thus, we need a more level playing field where a new LinkedIn or a new Facebook can import our contacts, so as to compete and have a realistic chance of challenging the incumbents. In this world the user has complete control over which data is shared from whom to whom and can withdraw any consent quickly and easily. A ‘consent dashboard’ for all your data.”
What will be the impact of the plans of the European Commission and do you consider it as a step forward?
Salmony: “This is a huge step forward. Europe is already leading the world in Open Banking regulation (which is now being deployed, largely under the European model, across the whole world) and in privacy (even convincing countries that have traditionally been against government interference that privacy is a necessary condition in the digital economy – and not just a fad of the Germans). This new, ambitious plan to create a single European ‘Data Market’ (not only capital and labour markets where people and money can flow freely) where data can flow freely – subject to user control and proper safeguards is a truly transformative idea. With everything now becoming digitised this is clearly the way forward.”
Where does digital identity fit in this picture?
Salmony: “One of the prerequisites in order to set up a reliable trusted digital economy is that one must know for sure who is talking to whom – and what their rights are. Is this really my bank? Is this really this customer? Is he over 18? Is this robot allowed to install this machine part? Is this software allowed to access this account? Currently we are using passwords (a 1970 technology) as the basis for identification and authentication. This is ludicrous, inconvenient and unsafe. We know how to build better identification systems using modern technology (e.g. biometrics), based upon dynamic risk-based analysis (not rigid two-factor) which is both safe and convenient. There is no longer a trade-off. The Nordics have shown how banks can establish themselves as centres of trust in this new digital world and build digital identity out into further commercial digital services. If our fundament is rotten, we cannot build a modern house on top of it. So, let us sort digital identity with high priority.”
You said earlier that digital identity also plays a key role in defending ourselves for the possible next crisis, which might be a crisis around cybercrime. Could you explain that?
Salmony: “We know we will continue to have crisis – environment crises, health crisis, financial crises and all are working hard on mitigating their effects. However, some say the next banking crisis may come from an unexpected direction: from cybercrime. The financial services world is holding up best of all industries against cyber-criminals, but the onslaught is staggering, the level of innovation, creativity and professionalism of cybercriminals is increasing at an alarming rate. Therefore, the more we build up digital systems, the more we share data, the more we need to build our armoury against cybercrime. Good digital identity that makes impersonation impossible is a first step but many more need to follow. We know how to do this. Let us do it.”
So interesting times are coming up with new possibilities for banks?
Salmony: “If we go on the path of opening up data – in the interest and under full control of the customer – we will create a new digital world with unlimited possibilities. If we ensure that this new world is based upon rock-solid foundations, then we will all be safe and can enjoy the fruits of the creativity that will be unleashed. Banks are already playing a leading role in keeping us safe, in being a centre of trust for consumers and businesses and can build on this to come into the new world as a key actor and a centre of the digital ecosystem.”