The battle lines have seemingly been drawn when it comes to financial data. On one hand, data aggregators want to be the customer advocate by giving customers unfettered access to their bank data via application programming interfaces, screen scraping and other methods. On the other hand, some banks are now trying to help the financial industry move away from screen scraping as they view the technique as unsafe.
As an industry, we need to think about this debate differently and focus on the bigger picture: new revenue sources.
It's true that banks don't want to share customer data. Why would they want to? But the reality is that many customers do want to share their data, and we expect this trend to continue and magnify. APIs are a much better way for customers to share data than screen scraping because customers don't have to give away their usernames and passwords to nonbanks. I have written research on the use of APIs in the banking industry for many years now and am passionate about their ability to transform the industry. But there is much more at stake here than screen scraping versus APIs, and banks' unease about sharing customer data. These are side issues, not the real problem. The real problem is that customers have data in too many different kinds of siloes.
Customers should own their data. However, right now their data is about as siloed as a bank's application architecture is. For example, my bank data is in multiple places because I use several different banks for various products and services. I also have insurance, health care, legal, education, government and other data in yet many more places. Data is much less accurate and useful for me when it's scattered across different companies' login portals.
The opportunity for banks is to bring all the varied customer data sources together and become a personal data bank. A personal data bank will collect, protect and monetize personal data that is entrusted to the company by individuals on their behalf. Data will initially include banking data. Over time, the digital account will also include health care, legal and other customer data.
In this model, the personal data bank will help someone like me manage and protect my data by centralizing my data. It will crunch my data to perform operations for me, such as running an auction for me if I want to buy a new washing machine. The personal data bank will represent me, for example, by sending an MRI and blood tests to the orthopedic surgeon in advance of my rotator cuff surgery after an unfortunate mountain bike crash. The personal data bank will help me monetize my data as well. For example, maybe I could earn $20 by sharing some of my health care data with a university research project.
The provider of the personal data bank will make money by helping customers monetize their data via revenue sharing and other methods. The digital bank will charge fees in some cases as well. For example, there could be a free version that includes advertising, and a fee version that excludes advertising.
Banks should want to become a personal data bank because it will help them remain the primary financial advisor to customers. Personal data banks represent a new digital revenue opportunity as well, and CEOs expect digital revenue to more than triple in the U.S. over the next five years. The reason customers would want to use a bank as their personal data bank is that they trust their brands.
Customer data is not a battleground between banks and data aggregators, or between screen scraping and APIs. It's an opportunity for banks to remain the primary financial advisor to customers, to empower customers and to become a digital bank of the future.
If banks don't become personal data banks, some other company will. Then the battle is lost.
Kristin Moyer is research vice president and distinguished analyst at Gartner Inc.