Ghela Boskovich on the fate of banks, financial inclusion and the power of data

Ghela Boskovich is one of the strongest voices in the world of fintech right now. Her articles and talks on the subject of financial inclusion, democratization and the future of data throw out challenges to the status quo, which is precisely why you’ll find her speaking at nearly every payments and finance event you attend.

I was lucky enough to speak to Boskovich – the founder of FemTech Global, a world-wide community working towards inclusion and diversity in financial services through technology – between her numerous engagements at Money 20/20 EU to discuss the fate of the banks, financial inclusion and the power your data will hold in the future.

So, what are you here to shout about?

I’m starting with ‘The Curious Case’, which is a series of very informal Oxford-style debates where we pitch experts against one another on a particular topic, then ask them to switch sides half-way through. When we tweet about some of these concepts, we often reduce them to their simplest or least interesting form. The purpose of these debates is to bring out the nuances of the more complex topics we discuss. The first one, tomorrow, is about banks being dumb pipes.

Dumb pipes?

Solely data providers – the idea being that, if you don’t evolve, are you relegated to simply being a utility, or do you still serve a value-added service in the market? The likelihood is that they’ll be disintermediated by third parties, and if they don’t respond to market pressure, customer pressure or even regulatory pressure, they will be relegated to being no more than a transactional data provider.

The rest of my day is going to be spent talking about digital identity, and how to introduce the concept of being a custodian of identity as the next business model for banks, rather than simply being a money mover, and how to commercialize digital identity for individuals. This is based around the notion that privacy is, for the very first time, a codified human right, and that it will play an overarching role in how we move forward in the digital space. How banks could be the custodians of identity, then commercialize that for every party and the end customer who owns that original data.

The goal is to delve into some of the complexities and the mechanics that are required to enact this. A lot of that is based on the current processes for onboarding and KYC, which we’ve fleshed out into something called digital contextual identity.

Banks have so much transactional data, but it has zero context surrounding it – it doesn’t tell us the ‘who’, and it doesn’t tell us the ‘why’, and that’s the really crucial information. When we start to understand the ‘why’, the contextual data provides us with a much richer insight into behavioural and psychometric mapping, and we’re going to need that to really personalize services.

There’s an entire spectrum of what identity can, or should, look like from a very base mechanical perspective – what do we tokenize, what do we do about permission, how do we identify you and where you live, and the transactions you’re engaging in? Would you need an alternative service provided, why would you want that service, and what kind of insight can we gather about your individual financial and insurance needs that we could never gather from baseline transactional data alone?

I suppose there’s an interesting messaging clash going on with consumer data here. Consumers have been bombarded with warnings about the mismanagement of data of late, yet the very basis of these personalized financial services in the Open Banking era is the need for the customer to relinquish their data.

That’s just it – it’s contextual. I only need to reveal to you certain facets of that data, not the whole thing. It’s about managing the permissions for who can see what, and the degree to which they can see it. So, I don’t need to share my transactional data with you if it’s very specific to one thing, you don’t need to know everything about my health, my travel, and so on, if you’re just insuring my sofa. It’s the degree to which you share that data, and the permissions that surround how and who you share it with.

How is the data surrounding a transaction shared at that level, to that degree?

This is where a new product set can be created. There’s not a specific product set that says, “Here is my permission set”, but the beginnings of it are in the authorization and authentication components that we’re already seeing for Open Banking. For every single transaction we have to validate that the persons involved are who they say they are, validate that they’ve authorised the transaction, and authenticate that everything matches up.

Those mechanics can serve as a framework for how we start to grant permission to access data, or to the types of data we want to share, how we can actually, in a very nuanced way, also package that data so the customer understands what they’re sharing, and being able to educate them so that they can shift and change the parameters around the personal data they choose to share

We haven’t yet built the ability to consume it in a way that allows us to process it, analyse it and gain insights. We’re still looking at that data science component – how do we analyse, not just predictively, based on historical data, but based on contextual data for that individual, and only seeing slivers of information that are relevant to the choice or the offering that is being made.

What are the technological solutions that will power this new product set? I suppose blockchain springs to mind…

Nope – not interested. I don’t see that the blockchain has utility in financial services beyond supply chain finance. I have no interest in storing private data on an immutable ledger. In fact, I don’t want any of my data on that ledger.

Why is that?

Because eventually it will be hacked. I don’t need consensus to have a fact be reported. I don’t need multiple parties to hold that or to have access to it, even if it’s just to establish observational consensus that the fact or the event occurred. I’m much more interested in having my data tokenized, or having a proof of my data somewhere on a ledger or on a database. I think tokenization is fantastic, I think there’s a way to double-encrypt, or to take proofs and encrypt the proofs, so that there’s a double layer of security around it, and have the token distribution be the more interesting thing.

It’s not the event of the transaction, it’s where the event IP is distributed and who’s interested in that event. We should be looking at tracking tokens and their distribution across the network, and that insight into where that token ends up, who’s interested in that, rather than what’s inside of that token. There are differences between encryption and tokenization but I think there’s some sort of interesting blend when we look at just providing proof of something rather than the actual event.
It makes much more sense from a security and privacy standpoint, and it doesn’t have to exist on a blockchain, it can exist in any database, and I don’t need to have consensus across the board on that. It’s not scalable. It’s an interesting concept, but I think the decentralization of values is much more interesting.

You’ve spoken a great deal about the fintech’s potential to be a democratizing influence in the financial lives of people across the world. What major developments do you think need to occur to level the playing field?

I think the first building block for anything is having an identity that allows you to participate in a system. I want democratisation to have an effect on the underbanked or unbanked, and allow people to understand the value of the transaction they’re making. When we switch to a data-driven economy, rather than an asset-driven economy, that does mean that personal information has more value. It levels the playing field insofar as I don’t need to have assets to have value as a customer.

When we start looking at how we can shape data liquidity, how data can become an asset class itself which has its own value, that means people can generate data about themselves that gives them a type of liquidity. It’s a secondary market, it’s not a traditional asset class market. Everyone can generate their own inherent value, with their identity as the root of that.

Creating a new market for liquidity that’s in data form rather than asset form means there’s a lower barrier of entry for any individual. They don’t need to have a savings account, they don’t even need to have a deposit account, their activities around the community create value. The ubiquity of smartphones and access to the internet now allows us to do that. But I don’t think we’ve cleared the barriers in the way of that yet. The old model is completely outmoded. Whereas, if a bank managed the permissions someone is granted to access your Facebook account and your personal data, that becomes more interesting.

What examples of this in action could you imagine?

A nice example would be booking an Uber. If your ride costs £20, but I share some information about what I’m doing at my destination – if I’m going shopping and what I’m buying, for example – I might get a discount on my ride because I’m willing to share that information.

Say, for example, you’re buying a specific pair of shoes for a partner or a child, from a specific destination, with a specific budget. For all those little bits of information, they start discounting the cost until eventually they’re paying me to ride with them because they now know how much I’ll actually be paying. Those sort of scenarios, where I share my contextual ‘why’, become valuable, and that starts to shift the dynamics.

What if I’m a bank and I can say, “I will manage those permissions and that information for you, and deliver it in a way that is secure and private, and I’ll continue to do this until you tell me to stop”. They can manage that so that you understand your market value is for that particular piece of information.

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