From Wasted Data to Maximized Intelligence: MX Product Updates
July 17, 2024 | 2 min read
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The financial data economy has remained largely untouched by strict regulations over the past decades. There were minimal requirements for how data brokers (those who collect, organize, and sell personal data to third parties) could use consumer data — which created severe consequences for consumers.
Those days are over. The biggest regulatory changes to digital financial data is on the horizon with the CFPB’s final ruling of Section 1033. Businesses across the industry will need to adapt — or face the risk of becoming irrelevant.
As Alex Johnson said in his latest installment of Fintech Takes, “banks, credit unions, and fintech companies need to prepare to compete and win in a very different environment than they are used to.”
In case you missed it, here are some of the key highlights from this Sponsored Deep Dive on The Future of the Financial Data Economy.
Consumers and the financial industry can greatly benefit from the proper use of consumer-permissioned financial data. Consumers gain greater insights into their finances while consumer-permissioned data can help businesses deliver more personalized experiences and tailor their products to the consumer.
“Financial data generated by consumers belongs to consumers, and they should be allowed to share it with any company that they want in pursuit of better financial products, experiences, and outcomes.”
The history of financial data sharing has had its low points. Johnson says, “it was not always clear to the consumer who had their data, how long they would have it, or precisely what they were doing with it.” But that can and should change. The CFPB’s Section 1033 rule will serve as a catalyst for how companies leverage consumer-permissioned financial data to develop more innovative products and services and compete more effectively for the most valuable customers.
It’s the difference between a well-structured highway system versus driving on fury road like Mad Max. Instead of being chaotic and messy, the road is governed by a common set of rules and standards, not who has the biggest car. “There are designated on-ramps (for consumers’ granting permission), exits (for consumers to revoke access), and traffic lanes (for consumers to control which third parties see which data). And safety (via APIs instead of screen scraping) and fuel efficiency (data minimization) are paramount.”
Financial institutions find themselves at a crossroads where they can either adapt to new technology that will allow them to use data for the delight of their customers, or find themselves stuck behind the competition.
This isn’t just about meeting compliance obligations. It’s about delivering value to consumers.
“Are you building compelling reasons for consumers to share their data with you into the context of your products? Put more simply, what do your customers get out of sharing their data with you?”
Financial services providers should focus on how they can transform data into insights that will ultimately benefit the consumer.
Be sure to read the full Sponsored Deep Dive for Alex’s full take on the financial data economy.
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