In countries as diverse as the United Kingdom, India, and Mexico, there is momentum to increase consumers’ ability to access, manage, and control their digital identity and history. Whether this is government records, bank account data, or web browser activity, providing consumers with the ability to access and share their digital identity and records could increase competition and innovation by letting financial service providers better target and price products to consumers. Similarly, when consumers can freely bring their data to an open market, this could increase choice and push more competitive pricing and product terms.
To carry out these mandates for greater consumer access and control over their digital identity, a range of public and private sector data sharing models are being developed. These models offer insights into the rules needed to enable greater data sharing; how to balance data privacy with data portability; data sharing platform architecture; and data classifications and definitions. For the purposes of this research, we define a data sharing model as follows:
Data sharing models refer to a service, platform, or product that collects and/or creates digital records for individuals including financial history and alternative data (e.g. web history or phone records); and allows individuals to determine when and how this data will be made available to multiple third parties offering products and services.
Whether directly led by consumers or primarily managed by firms, a data sharing model should have at its core elements of consumer rights to their data and openness to different providers that enables greater sharing of information at the consumer’s discretion. Enabling of greater sharing of information is essential for data sharing models to realize four potential benefits for financial sector development:
1. Increased financial access
2. Financial service innovation
3. Increased competition
4. Improved pricing and product quality for consumers