Artificial intelligence and sensor technology is driving the development of new business models in the financial sector. Access to data from, among other sources, social media, mobile apps, location data and sensors has prompted a race to acquire as much data as possible about customers, in order to predict their behaviour, desires and needs.
The changes in the finance and insurance industries will affect our privacy. How deep into our lives do we allow insurers? Who will have access to our banking data and how will it be used and re-used? How can we keep the consumer in control in a complex business environment?
Why are these major changes happening in the financial sector right now? Firstly, the trend is being driven by the fact that it is becoming easier to collect, store and analyse vast quantities of data, at rapidly plummeting costs. Increased expectations among consumers are also a driving force. Consumers have become used to quick and easy access to services on their smart phones. Ample availability and user-friendliness are crucial if consumers are to make use of new services.
Demographics constitute a third, related, driving force. The so-called digital natives, those who have grown up with a smart phone in their hands, have higher expectations with regard to what a service should deliver than previous generations. Nor do they have the same sense of loyalty to traditional institutions, such as banks and insurance companies, and are more open to using services delivered by new players.
Fourthly, regulatory changes are encouraging innovation and new business models. In January 2018, the EU's Payment Services Directive 2 comes into force. This opens the markets for banking, finance and payment services to new players who, with our consent, can obtain direct access to our accounts and transactions. Banks will no longer have monopoly on our account information, and new services for managing our private finances will emerge. On 24 May 2018, today's data protection legislation will be replaced by a new EU regulation. The new General Data Protection Regulation (GDPR) will also create an overall framework for how personal data may be collected and used for the development of personalised insurance and banking services.
This text is an exerpt of the report on privacy trends, published by the Norwegian Data Protection Authority annually. The chapter on the fintech industry can be downloaded below.
Download the chapter on developments in the finance sector (2017, pdf)
Download the full report (in Norwegian, pdf)