A conversation with Paul McCarney, CEO Data Republic about Open banking, AI, data breach and all things start-up.

I had some questions about Open banking and I knew just the leader to ask. I had the opportunity to talk to Paul McCarney CEO of Data Republic at Stone and Chalk. Please join our conversation where we talked about Open banking, AI, data breach and all things start-up.

Shamima : Open banking will empower customers to tell banks how to distribute their data. As an AI start-up we are excited about the prospect of getting access to data more easily. What will the open banking model mean for startups?

Paul : The Open Banking model will mean different things to different people. For startups, it will mean that having acquired customer consent, they can directly access certain types of authenticated bank data to deliver a personalized product or service, or make switching easier. This is a big deal because we’re talking about requesting access to authenticated data directly from the bank as opposed to existing data scrapping or crawling practices.

The key thing here is customer consent. The customer needs to clearly understand what they are opting into. After all, Open Banking is primarily about improving customer experience and delivering value to the customer.

We’re a little way off legislation but I foresee only specific use cases, directly linked to customer benefit, being ‘approved’ for inclusion within the Open Banking model.

Shamima : Now how does this new model of data sharing change the dynamics of data ownership? Is it naïve to think customer always owns the data?

Paul : The data ownership discussion is interesting because in the vast majority of cases, data is generated via the recorded interaction of two parties; the customer and the organisation. Organisations have, over time, invested in infrastructure and data teams to help them use the data generated via customer interactions to deliver better service, better products or better product delivery models.

Many feel, and I agree, that these systems have swung too far in the favour of organisations and that customers lack the necessary control of their own personal data records.  Changes in regulation like Open Banking and GDPR in the EU are all about redressing this balance and giving control over personal data back in the hands of the consumer.

In so far as the dynamics of data ownership, Open Banking will see customers able to exert greater control and choice over their personal data records, however it’s likely that banks will still retain a joint right to the use of that data record for things like modelling or more general analytics. It’s important that this remains the case, as data fuels decision-making in business and society, if data assets are depleted or drained, insights can’t be developed or applied and everyone loses out.  For me, it’s a joint right that must be underpinned by informed customer consent.

Another interesting component of this emerging data sharing dynamic is the concept of data reciprocity, included in Scott Farrell’s Open Banking Report.  It means that if you are requesting data as part of the Open Banking model, you need to be able to share it as well. You can’t just take data; you need to fuel further data liquidity in the ecosystem.

It will be really interesting to see how that scenario plays out with the likes of digital giants like Facebook or Google who could potentially direct customer requests for data enmasse and then build financial products to compete against the banks. However, then they would need to reciprocate data into the ecosystem.  It could be an absolute game-changer across every industry. Scott has done a great job of defining that in the Open Banking Report.

Shamima : How does Data Republic work with FinTech’s to help facilitate data exchange?

Paul : Data Republic provides a data sharing governance platform and marketplace where organisations can safely share and license data, without risking consumer privacy or data security – it’s essentially a legal and technical framework similar to the one being prepared in the open banking model - to enable the safe sharing of data and insights.

We mostly enable the secure, governed exchange of anonymous, aggregated datasets rather than individual records. Use cases for FinTech’s would typically involve accurate customer demographic profiling or market analytics.

Supporting FinTech innovation through data sharing is a big goal for us and we work with data owners in our ecosystem to support FinTechs , a great example is our involvement with the FUELD data accelerator.

Shamima : My next question is about customer data empowerment / consent? Given the current development in Facebook, do you think customers will opt in to give the consent more easily? If we take the Facebook example, customers have given consent and opted-in, but might not necessarily understand what they have given consent to.

Paul : I think the Facebook/Cambridge Analytica scandal has been an eye-opener for customers who weren’t aware of the extent of data capture they were agreeing to in certain Facebook Apps.  The terms were too opaque for users to really understand what they were agreeing to.

It’s also wake-up for all organisations to focus on both gaining informed customer consent and actively enforcing governance when sharing data. Facebook failed to adequately govern the data they were sharing with app developers, it was open slather and there no enforceable limitations or liabilities on a player like Cambridge Analytica to stop them from on selling targeting services to undermine democratic processes.

I think trust is key to getting customers to give you consent. The Open Banking Report sets clear guidelines around the way consent needs to be managed to ensure the customer clearly understands what data is being requested and for what purpose. 

If a FinTech or bank are transparent about the terms of the data transfer and the value is tangible, I think customers will still opt-in but it’s still up to all organisations to act with transparency and deliver choice to customers when it comes to their data.

Shamima : Will the customers resist the change? What’s their incentive in bringing data across?

Paul : To personalize their own product/ service and get a better deal. I don’t know if you remember a time when if you wanted to change your mobile phone provider, you had to get a new number. If you want to go to a new bank, you have to start with new transactions. Everything else stays at your old bank. Increased transparency would allow customers to leverage their good credit, payment behaviours etc to secure a better deal with a smoother onboarding process.

Shamima : And Paul finally on start-up advice. Data republic has massive growth in last 2 years and you are mostly working with tier 1 Australian banks. Is there a start-up trick to apply to work with big 4?

Paul : It helps to have some degree of credibility, who you’ve worked with in the past life or the ability to show off the caliber of the work you’re currently doing. Then you just need one bank to start. The reality is, often no one wants to be first. Finally, it’s persistence. There is a famous quote by Calvin Coolidge “persistence is omnipotent”.

Shamima: Thank you Paul. Such great words of wisdom to finish it off with. Thank you for your valuable time.

*Originally posted on LinkedIn on 18/04/18


Shamima Sultana