Cesar J. Richardson discusses how a blockchain-powered data marketplace could unlock the value of data for the masses.
Our very own Cesar J. Richardson, Strands’ General Manager for Americas, is one of the authors of The AI Book, an “artificial intelligence handbook for investors, entrepreneurs and fintech visionaries.” The book is published by Wiley and has been co-edited by a team of recognised FinTech and AI thought leaders.
Cesar’s chapter, Open Banking, Blockchain and AI: The Building Blocks for Web 3.0, focuses on the rise of Open Banking and the resulting change in the way transactional data is used, shared and stored outside Financial Institutions. This paradigm shift poses very interesting questions. Consumers will soon be able to choose whether to share their data with third parties in exchange for value-added experiences, so how can crypto technologies be leveraged to build a new data-sharing protocol that ensures the success of open data and benefits humanity as a whole?
We had a chat with Cesar to discuss the main points of his article and review the amazing and potentially life-changing opportunities a blockchain-based data marketplace will bring to the world.
Blockchain is often referred to as the technology that could change our world. How do you see it impacting the banking and FinTech industries?
Blockchain technology is going to be an integral part of the next industrial revolution, and how banks are going to leverage it is an interesting question. I believe there are some more obvious use cases which revolve around improving processes, removing human error and increased productivity in multiple middle and back office jobs. There are also many new financial products that will emerge from the application of smart contracts and the ability to control outcomes based on unlimited variables.
The alternative concept I discuss in the article revolves around the symbiotic relationship of a decentralised data platform that leverages blockchain to remain trustless but also incorporates the ability for crypto tokens to create a unit of value enabling a free market based economy driving the allocation of resources and data for optimum performance.
Many banks, especially in Europe, are looking at Open Banking as a way to find new revenue streams. Can blockchain technology be applied to this data sharing system?
In the existing banking landscape with low interest rates and continued market consolidation, plus the current Covid-19 situation, banks are finding it very difficult to generate returns using traditional business models. So they have plenty of reasons to start exploring how they can benefit from Open Banking and Blockchain technology.
Basically, Open Banking is a collaborative model in which banking data is exposed through standardized APIs. As we open these floodgates and we consider how sensitive this data is, the question I pose in my article is: How can we create a protocol to store and manage our data securely and benefit humanity in the long term? This is not some flowery idea. In my opinion, by building a blockchain-powered data marketplace we could ensure that data is mined for the benefit of the individuals who create the data but also to help democratize access to these huge data sets, and avoid it being unnecessarily concentrated within a few companies that monopolise and monetize it at the expense of delivering an open source approach that can benefit many more stakeholders.
How would this decentralized data marketplace work?
With Open Banking, multiple parties are able to extract, store and process data in multiple places, so the probability of a data breach increases exponentially. A decentralised data marketplace would provide a secure way to extract and store encrypted data, empowering users to have full control over who they grant access to their data, how it's going to be processed and to understand what they are getting in return.
Personal data management will become clearer and more transparent. Today, we are opening up our data to many players, such as Google, Amazon or Facebook, in the belief that we’re getting “free” products and services in return. The reality is that nothing is free. In exchange for giving away our information, these corporations are able to generate billions of dollars in revenue. Our data is very, very valuable and the population at large has been made aware of this especially following the Cambridge Analytica scandal which Facebook was embroiled in
An open protocol would enable this so-called data marketplace, which is going to be underpinned by blockchain-based technology and establish a massive data mart, unlocking the true potential of artificial intelligence.
It's very easy to infer a person’s behaviour and background from their transactional data. But a data marketplace could potentially be used for many types of data. What if we could also use it to extract, encrypt and securely store our healthcare and administrative data? This leads to amazing opportunities in the field of artificial intelligence, which is fueled with massive amounts of data.
In the future, as we increasingly rely on technologies like IoT, more and more of our sensitive data will be available to build a digital avatar with considerable granular data on all of us. By moving this data into a shared and secure environment, users can offer as much data as they wish in exchange for a measure of value. In doing so, people will be able to directly contribute and benefit from the potential upside artificial intelligence will generate. This data marketplace model will, in my opinion, create a new industry. There will be companies whose business model will be based around generating insights, which will then be leveraged by corporations and small businesses alike.
Do you think that this global marketplace, where people from all over the world would be able to share their data, could help reduce bias in artificial intelligence algorithms?
Yes, to a certain extent. Bias in algorithms emerging from a bias in the data, may be unintentional but affects the final outcome. By being able to generate massive amounts of data from across the globe, we’ll be able to obtain a much larger data sample size, thus avoiding the bias that would stem from smaller datasets collected in a specific region or by a specific demographic.
Ultimately, blockchain technology could be the catalyst in the transition to a Web 3.0 and could result in the true democratization of information and enable a dataset so rich that it sparks the exponential growth of AI.
How is Strands preparing for this future?
Through Strands’ Open Banking and aggregation platforms, we are building solutions to extract and normalize raw data. Today, the majority of transactional data in a bank hasn't been designed to be exposed and enriched. Strands’ technology not only enriches raw data, but delivers a platform so banks can store, process and expose advanced behavioural insights in a way that creates value to final customers and generated new revenue streams through personalisation of the digital experience.
The AI Book will be released on May 13. You can find more information about the book and pre-order it here.
If you are interested in finding out how Strands can help your bank, or if you would like to get a Free Demo of our AI-powered Financial Management solutions, please fill out this form and one of our Sales Reps will get back to you as soon as possible.