Tech needs open data barks watchdog

Canada’s top securities watchdog  has barked that open access to data is essential to developing financial tech solutions using innovative technology such as blockchain.

The Ontario Securities Commission (OSC) paper was the product of a “hackathon” it hosted in November aimed at finding new financial technology solutions to old problems such as regulatory processes, identity authentication, and transparency.

Blockchain, or distributed ledger technology, underpinned most solutions proposed at the hackathon, according to the paper. Blockchain is a tamper-proof, decentralised database.

Pat Chaukos, chief of OSC LaunchPad, a regulatory “sandbox” created last fall as part of its efforts to modernize and support innovation said that Blockchain has the potential to create solutions for problems in an open and scalable way,

But it needs open-access data before you can get to the innovation.

The European Union is ahead on this sort of thing. Its Payment Services Directive 2 (PSD2), for example, set to come into effect in early 2018, will allow a third party to access banking data with the customer’s permission.

“We’re going to support the facility of access to data. … It is very much a live discussion for all regulators, and I would actually even say for government,” said Chaukos.

Requiring financial institutions to make core information about a client available to other parties could potentially make signing up for financial services simpler, for example.

Open data would eliminate duplication and streamline manual regulatory processes, including how information is verified, collected and analysed, the paper said, improving auditing, and oversight, and making compliance checks faster.

The move would also increase competition and offers tangible benefits for investors, Chaukos added.