By Jean-Michel Franco, Senior Director of Data Governance Products, Talend
For any financial service organisation, failure to comply with regulations is front page news, which can majorly impact brand reputation, customer loyalty, and the bottom line.
The drive for greater transparency over customers’ finance data has led to a number of regulations and legal standards such as PSD2, Open Banking and, most recently, GDPR being introduced to the mix. In this article, I will discuss how we should view regulations as an opportunity rather than a barrier to innovation.
The regulatory minefield known as 2018…
This year has been a milestone one for regulatory changes in financial services. Open Banking launched in January 2018 with a whimper more than a bang. One possible explanation for this was a reluctance to cause a panic among consumers. Research by Ipsos MORI found that while almost two thirds (63%) of UK consumers see the services enabled by Open Banking as ‘unique’, just 13% of them would be comfortable allowing third parties to access their bank data. These figures are likely to have been impacted by high-profile breaches affecting the finance industry, which soured attitudes towards data protection policies.
Open Banking is built on the second Payment Services Directive, more commonly known as PSD2. Despite its fame being somewhat dwarfed by that of the General Data Protection Regulation (GDPR), PSD2 is a data revolution in the banking industry across Europe. By opening up banks’ APIs to third-parties, consumers will be able to take advantage of smoother transactions, innovative new services and greater transparency in terms of fees and surcharges. In the UK, this is partly enabled through the Competition and Markets Authority’s (CMA) requirement for the largest current account providers to implement Open Banking.
Creating these experiences for consumers requires APIs which seamlessly draw together information from multiple datasets and sources. Step in GDPR, which has tightened up the controls consumers have regarding their data and introduced greater financial ramifications on companies and organisations that do not adhere to it. $20,000,000 or 4% of global revenue, whichever is highest, is the penalty for non-compliance. One of the fundamental principles of GDPR compliance is providing greater transparency over where personal data is and how it is being used at all times. PSD2 and Open Banking align with this because it is the consumer that has the control over whether their data is shared with third parties, as well as the power to stop it being shared. In addition, the concept of the ‘right-to-be-forgotten’ enshrined in GDPR means that consumers can demand that any data held by the third-party service provider be permanently deleted. Similarly, because GDPR puts the onus of data protection on both data controllers (i.e., banks) and data processors (i.e., PISPs and AISPs) it is in the interests of both to ensure that their data governance strategies and technology are fit for purpose. As has been pointed out by Deloitte and Accenture, there might be contradictions within these regulations, but the overriding message is that transparency and consent are key for banks who need good quality data to provide more innovative services.
Regulating the world’s most valuable commodity
Having untangled the web of data regulations facing the finance industry, we must remember that with the rise of big data, the cloud, and analytics based on machine learning, data is no longer something which clogs up your internal systems until it needs to be disposed of. Data is the world’s most valuable commodity –the rocket fuel that has powered the rise of Internet giants like Facebook, hyperscalers like AWS, and industry disruptors like Uber.To the finance industry, data is a matter of boom or bust, and given the vital role they play in society, consumers and businesses need banks to have data. This is why banks must take a proactive view towards data governance and treat it as an opportunity rather than a necessary evil.
EY’s 2018 annual banking regulatory outlook stresses the importance of banks staying on the front foot when it comes to regulatory compliance. It lists five key actions as achieving good governance: creating a culture of compliance; exerting command over data; investing in the ability to analyse data; and developing strategic partnerships. As these key points suggest, a proactive view of data governance does not stop at compliance. It’s about creating a virtuous cycle of data being analysed and the insight gleaned from this analysis being turned into services which customers appreciate. This will make customers want to share their data as they can see the hyper-personalised and customised services which they get as a result.
As a rule of thumb, the more information you give your bank, the more personalised the service they can provide.This is true in the context of an entire range services such as calculating credit ratings, advising on savings, and borrowing. However, this scenario works both ways, and regulations such as Open Banking, PSD2, and GDPR put the power firmly in consumers’ hands. So, the more data organisations ask for, the higher the expectation of personalised services from customers. Customers need to see what their data is being used for, so transparency is key if finance firms are to build and maintain trust with customers. Furthermore, to offer highly personalised products and services based on complex analysis of big data, organisations should already know where data is stored and how it is being used.
In summary, data protection regulations such as Open Banking, PSD2, and GDPR must be viewed as opportunities for financial services organisations to re-establish trust with consumers, which may have been eroded by high-profile data breaches in 2017.In a way, this brings us back to the basics of what financial services are all about: being a steward of people’s assets. “When it comes to customer trust, financial leaders shouldn’t wait on regulators to keep their companies in check”
Understanding where data is and that it is managed correctly is not only fundamental to regulatory compliance and customer trust, but also to providing the highly personalised and predictive services that customers crave. Therefore, the requirements of regulation are by no means at odds with the strategies of data-driven finance firms, but in actual fact perfectly aligned.
Exclusive: Portugal sees green hydrogen output by end-2022, $12 billion in investment lined up
By Sergio Goncalves
LISBON (Reuters) – Portugal will start producing green hydrogen by the end of 2022 and already has private investment worth around 10 billion euros ($12 billion) lined up for eight projects that are expected to move forward, Environment Minister Joao Matos Fernandes said.
He told Reuters in a telephone interview there were also several “pre-contracts for the purchase and assembly of electrolysers” to produce the zero-carbon fuel made by electrolysis out of water using renewable wind and solar energy.
Such hydrogen is more expensive to extract than the heavily polluting conventional method of using heat and chemical reactions to release hydrogen from coal or natural gas, known as brown and grey hydrogen respectively.
Hydrogen is now mostly used in the oil refining industry and to produce ammonia fertilisers, but sectors such as steelmaking, transportation and chemicals are beginning to develop large-scale hydrogen applications to gradually replace fossil fuels as countries try to reduce pollution.
The European Commission has mapped out a plan to scale up green hydrogen projects across polluting sectors to meet a net zero emissions goal by 2050 and become a leader in a market analysts expect to be worth $1.2 trillion by that date.
“By the end of 2022, there will certainly be green hydrogen production in Portugal,” Matos Fernandes said. “Green hydrogen will, over time, allow Portugal to completely change its paradigm and become an energy exporting country.”
He said seven groups had submitted applications under Europe’s IPCEI scheme for common-interest projects to make part of a planned export-oriented “hydrogen cluster” near the port of Sines, from where hydrogen could be shipped to Rotterdam. Total investment there is estimated at some 7 billion euros.
A consortium including Portugal’s main utility EDP, oil company Galp, world’s largest wind turbine maker Vestas, among others, is behind one of the projects.
In Estarreja in north Portugal, local firm Bondalti Chemicals aims to invest 2.4 billion euros in a hydrogen plant.
Altogether, these envisage an installed capacity of over 1,000 megawatts (MW).
Matos Fernandes said Portugal was also negotiating with Spain the construction of a pipeline for renewable gases, including hydrogen, from Sines to France, crossing Spain.
Spain and Portugal also want to develop an ambitious cross-border lithium project taking advantage of the geographical proximity of their lithium deposits and aiming to cover the entire value chain from mining to refining, cell and battery manufacturing to battery recycling, he said.
Portugal is already a large producer of low-grade lithium mainly for the ceramics industry, but is preparing to make higher-grade metal used in electric car batteries.
A much-awaited licensing tender for lithium-bearing areas that has been delayed by the COVID-19 pandemic should take place by the year-end, Matos Fernandes said.
He promised the tender would address environmental concerns by local communities and there would be no lithium mining “at any cost”.
The minister also said Portugal would use its six-month presidency of the Council of the European Union to finalise a landmark law that would make the bloc’s climate targets irreversible and speed up emissions cuts this decade, expecting it to be approved in the first half of 2021.
(Reporting by Sergio Goncalves; Editing by Andrei Khalip and David Evans)
Under fire in EU, AstraZeneca CEO says ‘hopefully’ will meet vaccine supply goals
BRUSSELS (Reuters) – AstraZeneca boss Pascal Soriot said on Thursday he hoped to meet the European Union’s expectations on the number of COVID-19 vaccines the company can deliver to the bloc in the second quarter, after big cuts in the first three months of the year.
The Anglo-Swedish drugmaker has been under fire in the EU for its delayed supplies of shots to the 27-nation bloc, which ordered 300 million doses by the end of June.
“We are working 24/7 to improve delivery and hopefully catch up to the expectations for Q2,” Soriot told EU lawmakers in a public hearing.
Under its contract with the EU, the company has committed to delivering 180 million doses in the second quarter.
Soriot did not mention the 180 million target, but said he was confident the company will be able to increase production in the second quarter using factories outside the EU that had no production problems, including in the United States.
He confirmed the company was trying to get 40 million doses of the COVID-19 vaccine to the EU by the end of March, which is less than half the amount it promised for the quarter in its contract.
The EU, which has fallen far behind the United States and former member Britain in vaccinating its public, has repeatedly urged the firm to deliver more.
Lower-than-expected yields – the amount of vaccine that can be produced from base ingredients – at its factories hurt output in the first three months.
Asked about supplies to Britain, which relies on the same factories used by the EU, Soriot said the former EU member with a population of around 66 million was smaller, and noted that most doses produced in the EU were used to serve the EU which has a population of about 450 million.
Executives from rival drugmakers that have developed or are testing COVID-19 vaccines, including Moderna Inc and CureVac NV were also part of the panel.
But most questions were directed at Soriot amid anger that the company has failed to deliver promised vaccine quantities to the bloc on schedule.
Moderna Chief Executive Officer Stephane Bancel said the company has experienced fluctuations as the U.S. biotech group ramps up output of its COVID-19 vaccine.
He said usually a company would stockpile product ahead of a launch, but it is shipping every dose it makes, leaving it without any spare inventory.
His comments came a day after the company increased its output target for this year and 2022 as it invests in additional manufacturing capacity.
(Reporting by Josephine Mason in London and Francesco Guarascio in Brussels; Editing by Susan Fenton, Bill Berkrot and Keith Weir)
Shift to sun, ski and suburbs gives Airbnb advantage over hotels
By Ankit Ajmera
(Reuters) – Airbnb’s quarterly results are likely to show the pandemic may have helped the home rental company lure leisure travelers away from big hotels during the global travel collapse of 2020.
Weary of being locked up in their homes for months, travelers hit the road and booked homes and cottages on Airbnb, while avoiding flights and downtown hotels, analysts said.
Airbnb accounted for 18% of the total U.S. lodging revenue in 2020, up from 11.5% in 2019, data from hotel analytics provider STR and vacation rental data company AirDNA showed.
It outperformed the hotel industry and online travel agents such as Expedia and Booking.com thanks to its greater offer of ‘sun, ski, and suburban’ rental homes, Cowen & Co analysts said.
(Graphic: Airbnb grabs bigger share of U.S. lodging market in pandemic: https://graphics.reuters.com/AIRBNB-RESULTS/yxmpjxqdopr/chart.png)
For an interactive graphic, click here: https://tmsnrt.rs/3pPbQwH
In 2019, about 90% of Airbnb’s bookings came from leisure travels compared with about 20%-30% for large hotels chains, including Marriott and Hilton, that rely on business travel to grow their profits.
“Unfortunately, the hotel operators do not have as much supply in locations where people are willing to travel,” said Jamie Lane, vice president of research at AirDNA.
Lane said with mass vaccinations later in the year, the share of alternative accommodations including Airbnb will drop before continuing to grow at 2%-3% per year once normal travel patterns return.
(Graphic: Airbnb U.S. sales against top hotels: https://graphics.reuters.com/AIRBNB-RESULTS/gjnpwzkdbvw/chart.png)
For an interactive graphic, click here: https://tmsnrt.rs/3dPKvsd
* The San Francisco-based company is expected to report gross bookings of $23.10 billion in 2020, down from about $38 billion a year earlier, according to the mean estimate of 12 analysts according to Refinitiv; gross bookings are seen rising by 50% in 2021.
* Analysts’ mean estimate for Airbnb’s full-year net loss is $3.52 billion, bigger than a loss of $674.3 million a year earlier. Full-year revenue is expected to drop 32% to $3.27 billion.
WALL STREET SENTIMENT
* Of 34 brokerages, 20 rate Airbnb’s stock “hold”, 12 “buy” or higher and two “sell” or lower
* Wall Street’s median 12-month price target for Airbnb is $156â€‹, about 22% below its last closing price of $200.20.
* The company’s stock has nearly tripled since listing in December
(Graphic: Airbnb’s stock has nearly tripled since debut: https://graphics.reuters.com/AIRBNB-RESULTS/jznpnoqrlvl/chart.png)
For an interactive graphic, click here: https://tmsnrt.rs/3dG2lOd
(Reporting by Ankit Ajmera in Bengaluru; Editing by Sweta Singh and Saumyadeb Chakrabarty)
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