“Open Insurance should bring an increase in innovation,” according to Sanjiva Perera, Managing Principal at Capco, a management and technology consultancy focused on the financial services industry.
He believes access to customer data will likely encourage new providers to enter the market and use their speed, agility and insights to create innovative new products and services that benefit consumers.
Perera noted: “There is no shortage of cheap capital looking to fund start-ups in a market that is ripe for growth, and the insurance sector is particularly attractive given its size and stability.
“The long-term savings and retirement markets, while historically resistant to change and slower to evolve, should be the first to benefit from open insurance. APIs will enable the efficient sharing of pensions data through which consumers will be able to better manage their hard-earned savings.”
The UK pensions dashboard is an example of how this will be a step forward for the sector as it allows customers to make fact-based investment decisions and bringing some benefit to wider society.
He continued: “It’s vital that suitable protections are put in place, both in the form of mandatory regulation and voluntary standards, to ensure customer data is not exploited. With regards to regulation, we need to see a common definition of data items and attributes that will be accessible through APIs.
It’s important that clear permissions are defined to allow customers to share data, which may be specific to the type of data, time period, and purpose of use.
Open finance is about increasing choice and financial inclusion, and allowing more people to access a greater range of products and services.
He added: “The data ethics angle is a minefield, and while we have seen equality legislation proliferate in most countries, it has often lagged behind the explosion of data that has occurred over the same period.
“Accordingly any legislation will need to catch up, and in the interim firms will need to carefully consider how they can best implement and demonstrate ethical practices.”