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Emerging Trends In Data Monetization In The Financial Services Sector

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Summary

This article discusses emerging trends in data monetization in the financial services sector. Digital technology has changed the traditional banking process and customers now demand convenient and personalized banking. Neobanks are better positioned to provide this due to their ability to leverage internal and external data. Data monetization involves obtaining direct or indirect economic benefit from large pools of data, and financial service providers generate data from both internal and external sources. Banks can monetize their data for a direct financial gain or strategic partnerships, and must have a Governance, Risk & Compliance approach to management when developing their own internal capacities.

Q&As

What digital trends have impacted the financial services sector?
Digital technology and the adoption of the internet have impacted the financial services sector.

How have consumer trends and preferences changed as a result of digital banking?
Consumers have increased their demand for convenient and personalized banking that is considerate of their unique spending and consumption patterns.

How do financial service providers obtain data?
Financial service providers obtain data from internally generated sources (zero- or first-party data) and from external sources (second- or third-party data).

What advantages do neobanks have to better serve their customers?
Neobanks have the advantage of leveraging on either internal or external data in order to understand their unique customer needs, and develop products that best suite them.

What regulations are being put in place to ensure data handling and customer privacy are maintained?
Regulations such as Payment Services Directive (PSD2) in Europe and the Central Bank of Kenya's strategic plan for 2021 to 2025 are being put in place to ensure data handling and customer privacy are maintained.

AI Comments

👍 This article provides a comprehensive overview of the emerging trends in data monetization in the financial services sector. It's great to see the role of technology and digital banking in transforming the banking process and making it more customer-centric.

👎 This article fails to mention the risks associated with data monetization, such as data handling and customer privacy. It's important to consider these risks when discussing data monetization in the financial services sector.

AI Discussion

Me: It's about emerging trends in data monetization in the financial services sector. It talks about how companies are using data to better understand customer needs and develop products that meet their needs. It also mentions that organizations can monetize data by selling or granting access to their large data pools to third-parties in exchange for monetary or other economic benefits.

Friend: That is really interesting. What are the implications of this article?

Me: Well, it has a lot of implications. First, it means that financial institutions are increasingly becoming reliant on data for insights into their customers and the market. This means that they will need to have the right processes and infrastructure in place to collect, store, and analyse data. Additionally, there are implications for customer privacy, as sharing data with third-parties could lead to a breach of privacy. Financial institutions will need to ensure that they have appropriate measures in place to protect the safety and security of customer data. Finally, regulators are starting to put regulations in place to ensure that data sharing is done responsibly and in accordance with best practices.

Action items

Research existing regulations and standards for data monetization in the financial services sector.
Develop a Governance, Risk & Compliance approach to data monetization.
Explore potential partnerships with third-party data aggregators to access external data.

Technical terms

Neobanks: A type of digital-only bank that offers banking services through a mobile app or online platform.
Data Monetization: The process of obtaining a direct or indirect economic benefit from large pools of data.
Zero- or First-Party Data: Data that is generated internally by a financial institution, such as from questionnaires, polls or surveys.
Second- or Third-Party Data: Data that is generated externally by a third party, such as from retail companies.
Open Banking: The sharing of internal data between financial institutions and third parties.
Payment Services Directive (PSD2): A European regulation that came into force in 2019 to guide data sharing.
Governance, Risk & Compliance: An approach to management and oversight when developing internal capacities to handle and monetize customer data.