Italy, December, 2020

Data is the new gold in Open Banking: the role of data, APIs, and analytics in banking transformation

With the increasingly accepted and widespread use of financial APIs, how are the financial needs and expectations of consumers and businesses changing? What is the future of Open Banking? These are some of the questions discussed by a panel of experts on December 10 at the Milan Fintech Summit, one of the key annual events dedicated to the future of financial services innovation.

Among those participating in the round table Data is the new gold: How Open Banking APIs and advanced analytics are leading the next wave in banking transformation was Davide Capuzzo, Analytics Management - CRIF Senior Director, who stressed that today’s digital world is hungry for data, with a view to making traditional and new activities more efficient. “However, in the field of Open Banking,” explained Capuzzo, “two main factors must be considered: the first being the nature of the data, since Open Banking data is certified and obtained through a clear agreement with the end user, whereas the second concerns the technological barrier. The term Open Banking seems simple, but the reality is that only by applying the best in IT, analytics and AI can you make this new data source valuable.”

During the round table, it was stressed that one of the most important issues in Open Banking is consumer consent to the sharing of their data with banking and financial services providers. With this in mind, Capuzzo pointed out that what is really important is the design of an effective user experience. For businesses, the benefit of speeding up the lending process and avoiding some of the administrative steps could be a good reason for sharing their current account information. For consumers, however, fast lending is not enough. The user experience must be more compelling, with lenders adding special conditions to loans or enriching the offering with other products and services. Capuzzo emphasized how Personal Financial Management (PFM) & Business Financial Management (BFM) services appear to be two very promising fields of application. For example, with BFM it is possible to optimize the business user experience by combining the company’s ERP with its current accounts in order to generate a much more efficient view of the business.

The discussion then addressed the issue of which players (GAFA, other non-bank operators, small banks, etc.) will benefit most from the large amount of data generated by Open Banking. Capuzzo pointed out that big tech companies have a technological advantage. However, banks are more familiar with the management of transactional and current account data and can, starting with the data they have, try out the best Open Banking technologies with the right partners to create an optimal user experience.

As for the attitude of financial institutions toward Open Banking, from the perspective of CRIF, which works alongside financial institutions around the world, “We initially observed many banks reacting defensively,” CRIF’s Senior Director explained. “Now we see that it is particularly the major players that are investing in Open Banking, with the advantage of being able to leverage their own current accounts and data, applying a ‘PSD2-like’ approach to manage their customer portfolio more efficiently. Tried and tested processes and technology will benefit business. Technology alone is not enough if you do not have the opportunity to test it on the transactional data typical of Open Banking, which represents an opportunity to accelerate digital transformation,” Davide Capuzzo concluded.

Antonio Deledda, CRIF Senior Director, also took part in the Milan Fintech Summit, giving a speech explaining why the new quantity of data that operators in the Open Banking market are now able to collect, through the adoption of AI solutions, will be a gold mine in this new digital economy.

Watch the video interview with Antonio Deledda.