SPECIAL FEATURE: The Modern-Day Pandora’s Box: data, data, data – Armalytix

Special Feature: Richard McCall, CEO and co-founder of Armalytix, has written an article on the subject of The Modern-Day Pandora’s Box: data, data, data.

Pandora’s Box has been opened again. New innovative financial products, all geared towards making our lives easier, have prised the box open and data has been released. This decentralisation of data is creating a range of difficulties, such as a negative customer experience and poor quality AML checks for companies who must gather more and more information about their customers to confirm they are who they say they are.

What chaos has been released this time?

The importance now placed on data collection is huge. Our economy is no longer trust-based, it is now proof-based, and firms are under increasing pressure from regulators to know more about their customers.

Add in the fact that companies need to take into account all financial data sources people have, from loans to multiple bank accounts and payslips, as well as non-financial data, such as personal data and identification checks, it is no surprise that companies are struggling to verify this data. It is all leading to more complex and longer forms.

Society’s need for a digitalised journey means that manually filling in forms no longer has a place, and any experience that isn’t digital is perceived as a negative one.

The endless trail of data means that businesses are unable to find the truth of the matter. This puts them at risk of reputational and financial damage, most commonly in the form of fines. For example, for failings in its AML checks and processes, HSBC was fined nearly £64 million by the UK’s FCA last December.

As the amount of data sources increases, so do the risks of financial crime. We need to find the ‘hope’ to solve this modern-day Pandora’s Box.

Open Banking to the rescue

Luckily, we have a key to unlock ‘hope’ from the modern-day Pandora’s Box – Open Banking. But in order to do this, it needs to incorporate additional information, such as personal data, ID, electoral roll, non-banking financial data and crypto to be as powerful and revolutionary as it can be.

Providing a standard and secure method to connect businesses and banks, Open Banking enables the sharing of data and access to banks’ services. The overall aim of Open Banking is to provide greater financial transparency, making the lives of businesses easier and handing customers more control over their financial journey.

Open Banking therefore ensures that data can be shared between a customer and a company in a safe, secure and transparent way, allowing customers to control what data is shared, which is particularly important in light of increasing fears around data security. It also creates an easy, stress-free digital experience that doesn’t require the filling out of forms and the hassle of collecting past financial data, which creates a greater digital journey and an enhanced customer experience.

For companies, Open Banking allows them to hand over control of data sharing to third parties, which can act as a data sharing bridge between the customer and the intended recipient. They can easily access multiple data sources, which can then be collated into an easy-to-read report for firms to complete any compliance or due diligence checks.

For the legal sector, the introduction of Open Banking has saved companies 90% more time that used to be spent on source of funds checks. As the day-to-day administration and compliance requirements are taken care of by Open Banking technology in the background, employees regain essential time, which is unlocking workplace productivity and is boosting companies value add activities and profit margins.

Shutting down the money-laundering playground

The decentralisation of finance, along with the rise of data sources has had another negative effect: it has created a playground for money-laundering and fraudulent activity. Criminals prey on time-poor employees who are not necessarily specialised in fraud detection, by hiding behind huge and unnecessary piles of paperwork.

With new figures revealing that £1.5 billion worth of property in the UK has been bought by alleged corrupt Russians, it is no surprise that the London property market is filled with illegal Russian money.

While the government has introduced the Economic Crime Bill to stop this dirty money coming into the UK, Open Banking presents a clear answer: by automating data collection to feed into a rapid online check that shows proof and source of funds as well as account verification. This provides property and conveyancing firms with a simple, pre-analysed and easily evidenced route to compliance.

With Open Banking gaining momentum, society’s problematic relationship with paper trails can be eradicated and a form free future can become a reality.

Curiosity has got the better of us and we’ve been tempted by Pandora’s Box to see how different financial products and options can help change our lives. In doing so we have released a wave of data into the world. Much like how Hope was the last thing left in Pandora’s Box, Open Banking combined with other data sources is our hope to solving the issue of proof in the digital economy.