Consumer-centric and innovation-friendly open finance.
At Insurely, we want to drive change and help transform the insurance industry for the better. As open data and better customer experiences are becoming the expectation, Europe must work towards delivering on them and stimulating innovation. Open finance can have a positive impact on both consumers and insurers. That is why we remain deeply committed to discussing the future of open finance with the European Commission and all relevant stakeholders.
Open finance is the next step on the journey towards an Open Economy, a journey which we are already well into, as the EU Commission has announced that they will present an open finance regulatory framework during 2023. Open insurance plays a significant role in the draft of the wider open finance framework.
If there is any doubt, open finance is not a temporary trend but a relevant and much needed business transformation. With the new law just around the corner, things are moving fast on how a new framework should look like. That is why an EU Expert Group just handed over a report on open finance to EU Commissioner McGuinness.
As the report describes the elements of an open finance ecosystem, below, we’ve assembled our main considerations on the report, and more importantly, our positive expectations in which a future framework can promote better-tailored products and services to consumers.
On data accessibility and data availability
- Consumers and third party providers (on behalf of consumers) deserve transparency to see which data is available;
- It is crucial to define a standard structure of presenting information, which is readable and understandable by the consumers.
On data protection and consumer protection issues
- Data processing needs a clear purpose - data subjects should be able to track who they shared their data with;
- Open finance should provide the necessary tools to enable consumer friendly consent management.
On data standardization
- A minimum set of data standardization should exist to cover ‘core’ data fields. What is defined as core needs to be based around the open insurance use cases benefiting consumers the most.
- This encompasses data fields that are required to unlock the most consumer centric use cases. i.e. open data should benefit the customer first.
On a level playing field
- Consumers should have power over their data: adding additional costs for consumers to access their data fundamentally challenges the right that consumers have to access their data about products they are already paying for. Consumers don't get charged to access their data on a website, why should data on APIs be any different?
- Data holders should not be able to recover costs for sharing data: this perspective is industry centric and ignores the consumers right to access data about products they are already paying for.
- Making consumers pay for their data is non competitive and does not ensure a level playing field. It creates a playing field that is tilted towards the incumbent.
- Data holders are already profiting from consumers, enacting a compensation scheme will only further that profit and will ultimately be detrimental to the consumer.
On key actors and success criteria for open finance
- Oversight is required to track the risk of misuse and consumer exclusion involved with the sharing of consumer data;
On the use cases of the expert group report
- It would have been beneficial to showcase insurance specific use cases which leverage financial data. From our perspective, these are the use cases which show the greatest benefit to consumers.
The time is now, so what should the upcoming open finance framework look like?
Open finance creates more open relationships between insurance companies and their customers based on trust, understanding, and data – a win-win for everyone involved. So what should we keep in mind when defining the upcoming framework?
- A consumer friendly approach can unleash innovation. In order to maximize the potential of open finance while minimizing risks, the data required for consumer centric use cases should be included in the first version of an insurance specific framework;
- Data sharing that unlocks significant value for consumers, make the insurance industry more transparent, and to ensure insurance companies become more consumer centric;
- A level playing field in terms of access to data, addressing technical obstacles — such as a lack of standardization — through market-driven efforts.
- A consent-based data sharing is essential. Upcoming rules should enable a consumer-friendly and intuitive journey for users, while also minimizing the scope data opened. Rules should promote competition by allowing customers to access their insurance data for their own benefit.
We are optimists by nature, so we look forward to continuing the dialogue with the European Commission and remain committed to supporting its work on promoting a more innovative digital single market by making sure that consumer protection, data sharing business models and a level playing field are key priorities.