Data for data’s sake is more than just wasted resources; it can also create frightening operational risks for the bank.
Banks are known for being data-rich, which sounds promising since data is often touted as the centerpiece of the prototypical open banking environment. But data without a plan can harm more than it helps, Wendy Cai-Lee, founder and chief executive at $385 million Piermont Bank, said last week during a panel at Fintech Nexus 2022 in New York City.
“What are we going to do with the data? What do we need?” Cai-Lee said. “If it’s a ton of data that we have no intention of using, at least from a bank standpoint, and we don’t know how to use it, then it’s actually an additional risk for the bank.”
Data security
Data security is one of the three data challenges the panel identified as critical to open banking. Risks run from compromised data integrity and missed revenue opportunities to under-consumption of good data. But with regulation of fintech innovators top of mind in recent months, Cai-Lee advised banks to keep regulatory risk as a high priority.
“What are you doing with it [data]? How are you collecting it? How are you storing it? Our examiners and regulators certainly look for that,” she added.
Data usability
Data must be more than secure, however – it must be usable.
Piermont Bank runs a on a Fiserv core and offers embedded banking and payment-as-a-service capabilities through an API-agnostic platform, Cai-Lee said. The key to maintaining and scaling these capabilities, both at Piermont Bank and beyond, is a focus on “synthesizing” data for customer usability at the bank level.
“Are you going to provide me with those reports? Are you going to be able to monitor these things for me?” Cai-Lee said. “If you give me a data dump, so to speak, then I need to create resources to be able to work with that, because it’s not just about getting it, it’s about what to do with it.”
Automate where possible
Critical to the data component of open banking is automation, Shmulik Fishman, chief executive at employment data company Argyle, said during the panel.
“I encourage everybody to get practical, to look at their business and examine where there are bottlenecks in your business,” Fishman said. “I think there’s a lot of interest in doing something innovative, so streamlining, cleaning up things, and making things more automated is a great place to start.”
Argyle facilitates real-time connections to user-permissioned employee information and counts $4 trillion JPMorgan Chase and $3.24 trillion Bank of America among its users.
Bank Automation Summit Fall 2022, taking place Sept. 19-20 in Seattle, is a crucial event on automation and automation technology in banking. Learn more and register for Bank Automation Summit Fall 2022.
