Kalifa: Stronger open banking and consumer data measures would speed up fintech transformation

Crucial role for regulators and governments on data protection, big tech

by | July 13, 2021 | bobsguide

With the help of open banking regulations, fintech can have a “transformational” impact on society, according to Ron Kalifa OBE.

The author of the high-profile report on UK Fintech, tasked by the government last year, was talking at Fintech Week London 2021 on Tuesday, where he outlined how fintech could solve major problems around identity verification, SME lending and consumer control over data.

“Open banking is the foundation of the future of finance in the UK,” said Kalifa.

The advent of open banking meant that traditional banking and financial services were forced to become much more consumer-focused, Kalifa added, as the regulations levelled the playing fields between fintech start-ups and large banking incumbents.

However, he said fintech was still falling short of achieving its potential in the UK, with three areas in particular showing potential for the sector to help tackle societal problems.

“Today, more than 1 billion people around the world have no formal way of proving who they are… The role of open banking infrastructure that’s already in place could be a possible means for providing identity verification,” Kalifa said.

On SME lending, Kalifa said open banking would help small businesses become more “resilient, productive and profitable” with the aid of cloud accounting and sophisticated cash-flow management services.

“These platforms allow fees to be reduced. Businesses can improve their financial management, and therefore their ability to cope with the change when cash flow becomes tight,” he added.

The ultimate goal, Kalifa said, was to improve the financial health of consumers through market innovation and competition. This meant there was a crucial role that regulators and governments had to play.

“In Australia, the CDR [consumer data rights] legislation is already making customer banking, energy, and telecommunications data available. That’s being done in order to catalyse improved fintech activity.

“In fact, Australians have described their CDR model to me as a mirror, an upgrade, of the UK’s approach to open banking.”

Echoing Kalifa’s sentiments was Imran Gulamhuseinwala, implementation trustee for the Open Banking Implementation Entity (OBIE), who said that open banking was merely the first step in a data protection journey.

“This is a story about consumer data rights, and open banking is just the first step in that direction,” Gulamhuseinwala said.

“The consumer data rights, or CDR – the Australian version of GDPR – has at its heart data portability and interoperability, and they see this approach as being extendible into big tech with issues of data monopolies,” he added.

 

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