News & Insights

Marie Walker is the resident Open Futurist at Raidiam, the pioneering data sharing technology company behind all of the most successful Open Finance implementations. Additionally, through her website open-conversations.org, she shares a daily list of the most interesting news headlines and insights related to Open Banking, Open Finance and the data economy. Here, she explains that, rather than being an existential threat, digital sustainability is an opportunity to improve products and services, and to achieve operational efficiencies. 

"Just think of all the wonderful things you could do if you had access to data from elsewhere."

1. What’s your understanding of the term ‘digital sustainability’?

Besides referring to the environmental, social and governance (ESG) aspects, digital sustainability applies perfectly to consent-driven data. The term ‘permissioned data’, along with ‘digital public infrastructure’ (DPI) and ‘smart data’, is increasingly being used to refer to Open Banking and Open Finance. Perhaps this is because the term ‘open’ can seem somewhat misleading, especially in the context of data privacy and security. After all, Open Finance isn’t about literally opening up people’s financial data to anyone who wants it; it’s about making data that belongs to the end customer, citizen or business visible and available to them, for their own benefit. I believe that is the essence of digital sustainability too.

One benefit of having availability and control over your data is that you can gain better access to more appropriate products and services. This improves convenience by automatically meeting your individual needs – at a basic level think of time-savings through auto form-filling, for example. Leveraging richer data sources is critical for financial inclusion, because it can improve access to credit for self-employed individuals or those working in the gig economy, for example, who traditionally struggle to access pensions, mortgages and other financial products. By looking at someone’s total earnings over an extended period of time, lenders can assess the risk of extending credit more fairly and realistically. On the other hand, it can help people to access the right financial assistance. For instance, if they have visibility of their whole ‘data self’, they can see their total income and how much they’re spending on essential bills and other costs. They might also discover that they’re eligible to apply for extra government aid – or, in an ideal scenario, the government could proactively inform them.

In order to leverage more data about a customer, service providers need to access data held by other entities – and this can be a challenge. If a bank is asked by a fintech to share a customer’s data, the bank needs certainty that they can trust the fintech is authorised for this access and will behave appropriately with the data they share. Regulators can play a key role here by establishing the ‘rulebook’: devising policies to preserve privacy, ensuring that no more data is shared than is strictly necessary, and defining what may and may not be monetised, for example.

To create a healthy data-sharing ecosystem, we also need willing participants at the organisational level. After all, in the past, data was considered a unique selling point. It was also a barrier to competition. That’s why Open Banking was introduced in the UK: to level the playing field. In this case, the government mandated the banks to take part, and also to fund the efforts. However, stakeholder engagement is also important. Governments need to think about how they incentivise companies to participate, how the implementation will be funded, and also how they will monitor compliance. Because simply imposing a mandate can result in companies dragging their feet, which won’t prevent implementation eventually but will hamper progress.

2. How does Raidiam help to solve the challenges related to digital sustainability?

The two co-founders of Raidiam consulted on the implementation of Open Banking when it was mandated in the UK. There were several problems to tackle, such as how would banks know where to find the data that the customers want to share? And how could they trust that they were sharing it, not only with the customer’s consent but also with appropriately authorised entities? A system of bilateral agreements between all nine banks and all other businesses involved simply wouldn’t be scalable. Moreover, it would restrict competition, limiting choice for customers by excluding smaller banks and tech companies without the resources to handle all the necessary agreements. 

To resolve this, Raidiam developed a data-sharing trust framework to ensure trust at the technical level, covering access management, governance and security for the entire group of organisations. The directory provides certainty about each participant’s role in the ecosystem, and what they are permitted to access. 

The trust framework isn’t a physical structure; data doesn’t sit on it or go through it. Instead, it facilitates the direct sharing of data between the data provider and the data receiver, preserving privacy with consent based on data attribute verification. The framework uses public key infrastructure (PKI) certificates for authentication of permissions, consent and authorisations, via APIs. These are built to specified standards – which Raidiam contributed to – so they are seamless, highly secure and, importantly, interoperable to ensure future scalability. 

A technical trust framework is hugely enabling for digital sustainability as it provides certainty about who is sharing data, for what purpose and for what duration, without the need for bilateral agreements between all companies – which are a source of huge economic and resource wastage. Moreover, since the trust framework is centralised, if a fintech entity or third-party provider (TPP) loses permission to be part of the ecosystem – perhaps because it loses its licence or experiences a cybersecurity incident – it can be temporarily suspended from the framework, immediately and for everyone. This saves a lot of valuable time involved in manual communication ecosystem-wide, plus it minimises the security risks.

The project in the UK put Raidiam in the unique position of being the world’s first – and still only – company to have a live technical trust framework for data sharing. Building on that success, we’ve since supported regulators, banks and private enterprises on similar projects in other countries, including the Middle East, Brazil and Australia. Our informal partnership with INNOPAY promises to be very valuable, with INNOPAY guiding clients through the decision-making surrounding the rules and agreements related to trust-based data sharing, digital identity and payments, and Raidiam then designing, developing and implementing the necessary technical infrastructure to facilitate the ecosystem. Together, we hope to continue to play a pioneering role – both in finance and other sectors.

3. What role do you see your technology playing in the future development of trust frameworks beyond the finance sector?

To truly unlock benefits for data users, there needs to be interoperability between sectors and across borders. For example, combining financial data with things like energy data could give consumers and businesses valuable insights into their spending as the basis for improved behaviours. Therefore, we see enormous potential for the emergence of ‘data spaces’ enabled by trust frameworks in other markets. Our technology is agnostic, interoperable and built on established standards, so there’s recognition that it’s no longer a tech problem; the same or similar tech can be embedded elsewhere. Now, the biggest challenge when expanding data sharing across other sectors lies in policymaking, homogenising the rules and ensuring conformance.

One reason why it all started in finance is the high degree of regulation in the industry. Other sectors are less regulated, which presents challenges. Take retail, for example. You don’t need a licence from the government to open a shop, but in a retail data-sharing ecosystem, there would need to be some mechanisms to validate each participant’s identity and compliance. Otherwise, other participants could be open to fraud.

We also see practical challenges like this in telecoms, for example. If a customer grants a smartphone app permission to track their location, the telecom provider has to share the location information with the app developer. But the telecoms industry is also highly regulated, and if providers share data with unvalidated developers they can face huge fines. But if there’s no system for licensing developers, how can they know whether they’re sharing data appropriately?

Together with INNOPAY, we’re leveraging our extensive mutual experience in private cross-sector ecosystems and government projects worldwide to explore the peculiarities in each project or sector so that we can tackle them in a digitally sustainable manner.

4. What is your advice to private-sector businesses and organisations in the context of digital sustainability?

There’s no doubt that digital sustainability is the direction of travel. Admittedly, the uptake has been slow, and movements like Open Banking have not yet fully delivered on their expected potential. But despite some impatience among investors, we need to remember that fintech is very pioneering and it’s still early days. Many other technologies have taken time to gain widespread acceptance – think of contactless payments and even mobile phones. 

So while a long-term vision is needed on digital sustainability, it’s widely acknowledged as being the way forward. The younger generation especially are online-savvy and privacy-aware, so those ‘consumers of tomorrow’ are going to start demanding data sovereignty. Additionally, governments worldwide are enhancing data privacy laws, and these will influence what companies are able to do. 

Companies need to reassess their business models and consider necessary changes. For example, it’s claimed that 45% of car manufacturers’ revenue comes from harvesting and selling data from computer-equipped cars. They’ll need to address this if such practices become restricted!

Similarly, companies need to prepare to compete, or risk getting left behind. If you don’t create new and better products and services, others will. And you need to look beyond your traditional ecosystem. Forward-thinking banks benchmark themselves against not only their competitors, but also other types of businesses such as fintechs and even the BigTechs like Apple and Amazon.

However, digital sustainability is not necessarily an existential threat. Rather than treating it just as an exercise in retention and damage limitation, view it as an opportunity. Banks that have fostered a good developer experience and encouraged interaction have been much better placed to capitalise on the Open Banking movement to provide better and more appropriate services to their customers, often in partnership with other types of businesses to provide complete solutions to bigger problems. Moreover, a trust ecosystem supported by the right technical framework can improve process efficiency and reduce costs – such as by onboarding customers in just a few clicks. And in the current climate, operational efficiencies can mean the difference between profit and loss.

My advice would be to start exploring. And don’t wait for the big, transformative idea. Just think of all the wonderful things you could do to enhance your existing products and services if you had access to additional data from elsewhere. For example, if you currently provide online accounting services to small businesses, think about which other services they need and how you could embed them in your platform to become a one-stop-shop for SMEs.

Then, reach out to others to create an ecosystem that facilitates secure, consent-driven access to the necessary data. Organisations have a habit of spending too much time discussing rules and standards. Sometimes, you just have to start experimenting. A sandbox environment using mock data is a safe way to collaborate with other organisations and discover what works.

5. Can you share some examples of digital sustainability in practice? 

Although I mentioned that it’s still early days for Open Finance, there are already plenty of examples emerging, often improving user convenience – securely, of course – by taking the hassle out of switching providers. For example, there’s an app called Raisin where, after creating an account and proving your ID once, you can move money around between savings accounts worldwide to take advantage of favourable interest rates. This is a great example of improving convenience and choice.

Another example is a digital ID scheme in Australia powered by the four biggest banks, who are exploring ways to monetise their premium APIs. In the case of customers buying alcohol, their age is verified by their bank confirming either yes they are old enough, or no they are not. This is privacy protecting and a great win-win for all parties. This is convenient for customers, it helps retailers minimise the risk of a fine for selling alcohol to underage consumers, and the bank receives a micropayment for the service provided.

Last but not least, I’d like to mention the Perseus project, a private, cross-sector ecosystem involving various types of businesses – energy companies, transport companies and banks. This proof-of-concept scheme is aimed at automating greenhouse gas reporting for all small businesses in the UK using accurate, assurable data. It provides them with information on all their carbon-generating behaviours – such as in their buildings or manufacturing processes – and automatically indicates potentially available green financing. This not only incentivises companies to reduce their carbon footprint, but also helps banks to meet their ESG responsibilities in terms of lending appropriately. 

This project was initiated by the nonprofit Icebreaker One, which illustrates that digitally sustainable data sharing doesn’t have to be government-mandated. I also like that it identifies and positively impacts business behaviours by bringing all aspects of digital sustainability together: environmental, financial and technological.