Chicken & Egg – Which Came First The Data Holder Or The Data Recipient

It is a truth universally acknowledged - by a certain sub-section of the populus - that fulfilling one’s Data Holder obligations in Open Banking can be a challenge.

We know this because 120 or so ‘banks’ in Australia have been through the process to get their data ship-shape and, boy-oh-boy, what a sha-mozzle that was for some.

Stories abound of at least one major bank being $400m+ in the hole on their Data Holder project - regardless of how profitable you are, that ain’t chump-change.

Other apocryphal stories abound: small teams brought to their knees (quite understandably) by the rigour and timelines imposed upon them in meeting Data Standards on time (and probably never on budget); individuals traumatised through over-work and newly imposed workloads and deadlines, far beyond what they’d previously encountered; nail-biting dashes right down to the wire, grappling with vendors who barely passed muster; a Stalingrad-esque grind to the finish line whilst seeping into famine and poverty.

Okay - I made the last part up, but you get the drift. 

I feel like I could be writing about something as dramatic as the French Revolution, not a scheme to enable free & ready access to banking data.

So the banks did it tough, some of them very tough. 

And many are now still  so scarred and bruised by their Open Banking experience that they aren’t yet ready to go near Open Banking again with a ten foot pole.

Fun fact: going back three years or so I was presenting to a group of mutual banks and suggested that they become Data Recipients and start offering funky and sexy solutions to their customers, given they could easily fast-track their accreditation to ‘play’ in the Open Banking realm.

Bear in mind that all had gone through the Data Holder process.

“Yeah, but how much will it cost?” came the question from the floor. “And how long will it take?”

“You could be up-and-running in six weeks and it would cost you maybe $3,000 per month,” I replied. [We had a sale on.]

The response was as you expect from folks who had just spent two years and at least six figures on a compliance exercise that delivered no obvious ROI.

They refused to believe me. 

Literally, jaws dropped, mouths wide open.

Most of them, quite rightly, were and are so jaundiced by the slow death-march to Open Banking compliance that they’ve needed to take an almighty pause for breath.

Despite them having actually already completed 95% of the grunt-work to get there. That final five percent can represent a gaping chasm.

[Now, there were a few super early-adopters in this cohort who did steal a march and went super-early. These were visionary innovators who haven’t been truly rewarded for their bravery (like those headed for the guillotine…see, I’m on a roll now with this French Revolution theme).]

Free Hack That Will Likely Save Your Business Money - SPOILER ALERT

But it’s not all doom-and-gloom, especially for Non Bank Lenders who, unlike the first-cab-off-the-rank banks, get to absorb all these data points and take the learnings from those who’ve trodden the path before them.

And the simple recommendation that is already being adopted as a strategy by some, is simply this:

Do Data Recipient first, before you get into the quagmire that is Data Holder.

By getting the “easy” (not to mention, way sexier) project out of the way first, you:

• fast-track innovation with an ROI

• fast-track streamlining and automating lending processes

• you fast-track delighting your customers by avoiding lengthy paper-based processes

• you fast-track belt-and-braces compliance that actually leads to increased conversations rates*

• you offset any risk of “alternate” data sources being banned (as happened this week in NZ and happened pretty quickly in the UK)

All before entering the compliance process that doesn’t do any of the cool, sexy stuff I’ve outlined above (and, yes, our definitions of sexy may vary, but I’ve been in this game a long time and I know what I like).

A number of forward-thinking Non Bank Lenders have already ploughed this furrow, more are considering it and plenty are moving to a Data Recipient as a fast-follower to the Data Holder piece.

My sage (and non professional) advice to you is this: go early on Data Recipient and your business will most likely benefit from it.

The steps to “Get Started” are small in number and very straightforward.