#DDIdiscussions | Open Finance, Ethics and Social Inclusion

Consumers must be involved in designing financial services if open banking and open finance are going to have a positive impact on social inclusion, a DDI seminar was told.

Open Finance, Ethics and Social Inclusion heard that opening up consumers’ data could deliver significant benefits, especially in terms of addressing the challenges of the unbanked and helping those with poor credit ratings.

However, Tynah Matembe, co-founder and CEO of MoneyMatix, which works to improve financial literacy, said nothing would be achieved without effective education and communication.

“Having data sets is one thing but involving vulnerable users in designing solutions is key,” she said. “That’s still a big gap.

“If we do that, that in itself is inclusion..involving vulnerable users in creating the right solutions for them. Otherwise, the data says one thing, and what the user does is a different thing. We have to be able to marry those two.”

Varun Paul, Head of the Fintech Hub at the Bank of England, agreed.

“We need leadership, coordination, and dialogue between the public and private sectors.

Once everyone’s pulling the same direction. I think we can see some real progress – as long as we have the end user in mind throughout,” he said.

“Technology doesn’t have to exclude people. For example, facial recognition and biometrics have greatly reduced the pressure to remember passwords. That’s a really big deal for some people, where not having to visit a branch physically has made finance much more accessible.”

Sorcha Lorimer, founder of Trace and Interim Privacy and Risk Officer for The Smart Data Foundry, said the last year had shown the need for governments to have good-quality, trusted information to design services, rather than using assumptions. The Smart Data Foundry could help, by shining a light on big societal issues and becoming a trusted data intermediary.

She said: “There’s lots of thorny issues when it comes to combining data sets and privacy issues. There’s no single fix; it’s a layered approach to managing that privacy risk, security risk and ethical risk. It’s still very opaque, and I would love things to be a lot more transparent. In the meantime, if we work towards common standards, I think there’s the opportunity for The Smart Data Foundry to be a trusted entity.

“We must start [by asking] what is the problem we’re trying to solve, then bring data points together and analyse  them. That purpose-led approach is really vital.”

Varun Paul used an example of how open banking could open up great new opportunities for small businesses: “At the touch of a button, a small business owner could put together their data – passport, DVLA, utilities provider – to instantly pass through KYC checks and onboard with a potential new lender. Then they could [use] their banking data, management accounts data, tax data, all in a standardised format, to provide a complete financial picture to a lender. For the first time, a small business would be able to shop around for a loan.”

Sorcha Lorimer said a big challenge was reducing jargon and making financial language less opaque: “We need very concise privacy notices, and terms and conditions. We need to shift something, because we keep asking for more concise Ts & Cs and it doesn’t happen.”

Tynah Matembe said people ‘off the data radar’ needed to have the benefits of open banking and finance clearly explained. “The key thing is grassroots engagement,” she said. “Show them how things can be cheaper – energy, loans, insurance. Then they can choose how to share data, and use open banking. We need to work with anchor organisations to use open banking to signpost vulnerable people to the right services.”

Watch the discussion that took place on Thursday 29th April 2021 back here.*

* Please note due to technical issues the start of the webinar could not be recorded.

As part of the Data-Driven Innovation Initiative #DDIdiscussions series.