The European Commission has recently published a European Strategy for Data. This will permit not only the free movement of labour, capital and goods between states – but also the free movement of data. Thus a new “Data Market” is created. The Data Act will require companies, governments and other organisations to allow the sharing of their customers’ data – of course, only if the customer approves. Previously, only banks were forced to open up data and payments to others.

Thus a more level playing field is now 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). This will change all industries, indeed 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. 

The open data economy is already on the way: 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 all this means that he 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 existing friends? Thus, we need a more level playing field where a new LinkedIn or a new Facebook can import my 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. 

In the end we need a ‘consent dashboard’ for all your data.

India, for example, has shown how this can be built in a way that truly motivates and benefits all parties.

Innovation through Regulation

Europe/UK 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’ where data can flow freely – subject to user control and proper safeguards under a new „Data Governance” scheme – is a truly transformative idea. With everything now becoming digitised this is clearly the way forward.

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, we need to sort the topic of “digital identity“ with high priority. Again Europe has stepped forward and published a very convincing proposal for an eID Wallet which might also have the potential to help move the world forward like GSM, GDPR, PSD2 etc.

Proper Identity against Cybercrime

We know we will continue to have crises – environment crises, health crises, financial crises and every time all work hard on mitigating their effects. Some say the next banking crisis may come from an unexpected direction: not form undercapitalision, from lack of bank stability etc (where everyone is looking now) … but 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, and only allows those with the appropriate rights to act is a first step but many more need to follow. We know how to do this. Let us do it.

Banks have core role and opportunities

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.

Dr Michael Salmony is an internationally recognised leader on strategy of business innovations in digital and financial services with a particular focus on Payments, Open Banking, FinTech and Digital Identity. He is board-level advisor to major international banks, industry associations, regulators and finance bodies across the world and regularly helps shape future directions in all key decision making bodies (e.g. European Commission/ECB in Europe, and central banks from Japan to Uruguay and Kazakhstan). He is Executive Adviser to the Board of Worldline, Europe’s largest (and the world’s 4th largest) processor of financial transactional services, which handles over 17 trillion Euro per year. He is strategic partner to Fintech Istanbul for the development of Open Banking, Fintech and further digital financial services in Turkey. His views are much in demand as keynote speaker at international events and he appears on TV/Radio/all electronic media on advances in finance and is quoted extensively (e.g. Financial Times, Harvard Business Manager, New Scientist, The Economist and by business schools and governments from Ghana to Malaysia). He has published much own original work which has been translated into many languages including German, Italian, Dutch, Finnish, Polish, Danish, Russian, Chinese and Japanese. He is extensively networked into the new financial services space and has the top 5% most viewed profile out of the 200 million members in the world’s largest professional network LinkedIn. Previous positions include Director Business Development of leading national central bank (Bank of the Year, Best Innovator Award). Before entering the world of finance, he helped transform companies and business models in many industries as IBM's Director of Market Development Media and Communications Technologies. He studied at the University of Cambridge UK and is married with two millennial children.