5 financial data trends to watch for in 2018

Financial data in 2018 see new developments in data access, aggregation, verification, control over personally identifiable data, and financial DNA

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Another year, another round of trends.

Given recent funding announcements, acquisitions and technical advancements in the industry, 2018 promises to bring plenty of new developments to the realm of financial data. Want a peek at what’s ahead?

Here are five big ideas to keep an eye on in the new year that will either have immediate impact or set the course for years to come.

1. Additional data access

More customer data could be on the move than ever before. The drive to better decision making using the power of data continues its march, and with it comes additional interest in accessing financial data for particular requirements. We’ve recently seen many services emerge or evolve to help people and organizations manage their money, and this will continue. However, just last year saw the lending industry—particularly mortgage lending—really start to pay attention to customer-permissioned financial data to accelerate digital lending.

This year, we’ll really see it take off as adoption accelerates and usage of this digital data broadly sweeps across all lending verticals. So, whether you’re getting a new credit card or buying a beachfront bungalow, you’ll be able to empower your financial data to demonstrate your ability to manage credit and repay your loan. This use case will drive additional data access and have positive implications across financial services.

2. Self-sovereign identity

Control over identity or, more specifically, personally identifiable data could see a notable shift as control moves from centralized authorities to the individual. We’ve made movements from the concept of federated identity to consumer-permissioned access to data. The next evolution is the idea of self-sovereign identity, which shifts control of personal identity from institutions back to the individual.

Using the distributed ledger technology found in blockchain, self-sovereign identity would enable consumers to determine when and where and what types of personal attributes are shared. One of the many compelling benefits is reducing risk of identity theft. When information is centrally stored, meaning when there is a large number of individuals whose personal identity information is housed in one place, it becomes a target for organized, well-financed hacking.

People who worry about the availability of their personal information might soon be able to rest assured that their identity attributes are less vulnerable and not widely available.

3. Standardizing data aggregation

The more financial accounts a person has, the more difficult it is to keep track of everything. And for the 37 percent of U.S. consumers who have two or more checking accounts, financial management can quickly become quite the burden. That’s where data aggregation can make all the difference.

By enabling financial management apps to display all of a user’s information in one convenient location, data aggregation can help set the stage for an easier decision-making process. However, accessing data has been complicated as there has been no standard to define it.

In Europe, we’ve seen the emergence of the Revised Payment Services Directive (PSD2), directing banks in the European Union to share previously siloed data with approved third parties through standard access. In the UK, the Competition and Market Authority’s (CMA) open API banking standard promises to put a system in place for Britain’s nine largest banks. Here in the US, we’ll see more market-driven innovation than from regulators, and we could see momentum behind an industry standard for data access.

4. Taking the fraud out of financial verification

In addition to helping consumers pin down financial information, data aggregation will help make way for a new-and-improved credit decisioning procedure. Often plagued by fraud, credit decisioning is in need of a solution that can help ensure the accuracy of financial verification.

Data aggregation aims to do just that. By asking users to permission required data and then delivering such data directly from the financial institutions themselves, data aggregation will help minimize the risk of lending fraud.

5. Financial DNA

Quickly gaining insight into the financial standing of consumers hasn’t always been feasible. But with digitally-driven financial DNA, this could soon turn into reality. Both consumers and financial service providers stand to benefit from a financial DNA that aggregates financial transactions across a series of accounts and then applies the appropriate analytics and intelligence to assess the financial fitness of the individual.

With a broader view of an individual’s finances, from assets to income to expense patterns, banks, lenders, advisers and others will be able to provide the solutions and advice that is best suited for their clients.

Every new year brings its fair share of changes—and 2018 is no different. Stay one step ahead of the competition by keeping these five financial data trends in mind.

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