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Financial data serves as an untapped resource. It offers transformative potential in reshaping the landscape of financial services. And it fosters greater inclusivity in banking and lending practices.

Benefits of sharing financial data

Rolands Mesters, founder and managing director of Nordigen, discusses the beneficial effects that sharing data can have on our finances.

With an increasingly fragmented market and challenger banks snapping at their heels, traditional retail banks, in particular, need to re-orientate their assessment processes or risk being left behind.

The financial landscape has undergone significant change over the past few years, this is hardly breaking news. By 2026, cash is forecasted to represent only 21% of payments as large banks increasingly collaborate with agile fintech startups. Despite this progress, up to 90% of loan applications are still rejected by banks and alternative lenders worldwide.

Many banks and lenders still rely on traditional data and inaccurate risk assessment processes. However, within the past few years, we have seen the rise of Open Banking, the development of new behavioural analytical solutions, and a huge increase in available data. The financial landscape is finally undergoing a much-needed process of evolution. Not only do we now have the resources, but we also have the tools to utilise them effectively.

Treading water

The fundamental problem, that is often overlooked, is that roughly three billion adults worldwide do not have credit records. Furthermore, they are struggle to open a bank account, secure a loan or purchase a home. Consider the catch 22 many immigrants face when arriving in a new country; one needs a registered home address to open a bank account, but cannot sign a tenancy agreement without a bank account. For those lucky enough to have credit, their data is currently processed by traditional credit bureaus that can provide suboptimal recommendations on their financial stability.

Alexander Alfano

Alexander Alfano is the Director and Chief Legal Counsel of Financial Legal Group INC. He is a member of the Association of Certified Fraud Examiners (ACFE), a member of the Federal Bar, and is licensed to practice in the U.S. District Court for the Southern District of Florida.