Data Wars

posted by Collin Canright on March 27, 2017 - 12:45pm

It was just a matter of time before the notion that customers own their data and not banks became a point of contention and lobbying in the United States, especially after the Consumer Financial Protection Bureau said as much last fall. European banks soon will offer "open banking," where customers can specify who has access to their accounts for payments, under the classically Eurocratically named Second Payment Service Directive (PSD2).

Last week, both the New York Times and The Economist referred to customer data as gold, and both noted that U.S. banks are not going to open up their data without a fight. As the Times put it, "banks are pushing for new data agreements in an effort to stop technology companies from getting access to customer data in ways they might not understand, or that could create security risks."

That's an awfully broad lobbying field, and the free-trade-oriented Economist suggests that regulators "hold their nerve" and be "ruthless both in ensuring that banks open up their infrastructure to others and in withdrawing the licenses of third parties that break the rules, particularly on cyber-security."

Opening bank data to FinTech firms gives both banks and FinTechs the opportunity to develop innovative services where the consumer comes out ahead. Yet that's likely to come later than sooner.

"My perception is that the industry is obsessed with this as a goldmine. It's doing to be exceptionally revolutionary, but the consumer side of the equation is a bit 'meh'. Most people I speak to just don't care enough about their bank. It is seen as a utility," Izabella Kaminska, an FT Alphaville blogger told a London tech panel.

Maybe so. But the utility business isn't such a bad deal when profits are politically locked in.

Time for B2B payments to get standardized, says Nordea

Majority of companies surveyed by Nordea say they are collaborating with at least five banks for their payments and collection needs. “This creates a potential deadlock: Do banks risk losing business by insisting on using their own formats?” the report asks. “Or do corporates limit their choice of bank by insisting on their preferred format?”

What a Durbin repeal would mean for credit unions

The Durbin Amendment, a merchant-friendly provision within the Dodd-Frank Wall Street Reform and Consumer Protection Act which caps interchange fees and requires issuers to support more than one card network, could be on the chopping block due to a Republican controlled Congress and White House, according to CUInsight. The move could mean more compliance costs for credit unions, because Durbin requires them to have two network options for card transactions.

Meeting demand for mobile “it” feature at a community bank

“The No. 1 objection that customers have to getting a debit card: they’re afraid,” Betsy Gomez, first vice president and director of retail administration at Provident Bank tells Penny Crosman of American Banker. The Jersey City, New Jersey-based community bank, which has about $9.5 billion in assets, rolled out an option for debit card holders to switch their debit cards on or off in order to protect their assets and control spending.

Opinion: Insurers must improve their mobile customer experience

Insurers are at the bottom of the satisfaction scale in terms of consumer mobile experience, writes Pat Speer for Digital Insurance. According to the Effective Mobile Engagement report, 85 percent of consumers are unlikely to do business again with the same organization following a bad mobile experience. Insurers are aware of that shift toward mobile interaction, and Speer argues that they need to re-think their mobile strategy to acquire more customers.

New US InsurTech Fabric targets patents

Fabric, an InsurTech firm now up and running in 32 states, will offer an accidental death policy and a comprehensive 20-year term policy, Business Insider reports. There are 37 million U.S. families without life insurance, and Fabric aims to make the life insurance purchasing process a lot easier by not attempting to upsell customers and speeding up the application process to just two minutes.

Beating SMB Alt Lenders at their own game

As the small business lending demographic shifts from baby boomers to Gen Xers and millennials—a demographic that is more tech-savvy than their parents—banks need to focus on simplifying the loan application process, writes Elise Hauser for FinXTech. Younger business owners don’t have the time to go to the bank and sit through a lengthy loan application process, so they turn to speedier alternative lending platforms. To compete, banks need to simplify the application process and lower loan origination costs.

Prosper reports surging losses as loan volume falls

The loan volume fell to $2.2 billion, a drop of about 41 percent, reports. As the company’s revenue falls and it continues to slash staff members, it is unclear whether or not the firm will return to profitability and whether the institutional investors will feel comfortable enough to return to alternative lending platforms.


Threat or opportunity? Blythe Mathers talks blockchain jobs impact
Though the conversation surrounding blockchain centers on the billions of dollars that can be saved annually by conducting transactions on blockchain networks or distributed ledger systems, not much thought has been given to what that means for job losses and salary reductions in the finance sector, writes Michael del Castillo for CoinDesk. “We actively, as an industry, have to get this technology right, in order to really see it create something foundational that will release the big gains, and the big benefits that will ultimately flow through to your man on the street,” said Digital Asset Holdings CEO Blythe Masters during the DC Blockchain Summit.

The blockchain’s salad days
Distributed ledger technology is going to disrupt the finance and legal industries by providing more accurate reconciliation processes and paving the way for “smart contracts,” but it remains unclear yet just how transparent these networks will be and how efficient they will be and how much transparency banks will be comfortable with. “How might such a ledger might operate?” asks Dave Birch in a piece for Tomorrow’s Transactions. “Would American Express want a rival to know how much vegetable oil it had on its books? Would it want anyone to know?”

The blockchain road will go through Chicago
Illinois is joining R3 consortium, which means the state is going to be active in bitcoin education with incubators, quarterly meetings and hackathons, writes Jeffrey Carter for Points and Figures. “If you are a Bitcoin developer, being in close proximity to supportive government officials who will help you can make a huge difference,” Carter wrote. “Why is this important to anyone who lives in Illinois? I believe that blockchain and cryptocurrency are going to be an integral part of the future internet."