The Next Generation of Data-Sharing in Financial Services

Using Privacy Enhancing Techniques to Unlock New Value

It is an age-old tale – three blind men stumble upon an elephant for the first time. One feels its leg and concludes that the elephant is a tree. One feels the trunk and thinks the elephant is a large snake. The last feels its tail and surmises the elephant is a broom.

In the financial services sector, institutions face a similar challenge of not being able to “see the whole elephant”; each institution holds a piece of the puzzle (i.e. data) when it comes to answering important questions such as “is this customer creditworthy?”, “are these traders colluding?”, or “is this transaction fraudulent?” However, with only their own data, financial institutions – like the three blind men – risk drawing the wrong conclusions. In the parable, sharing information is the key to unlocking the mystery of the elephant and building a complete picture of the pachyderm at hand. Unfortunately, this kind of data-sharing is not so easy for financial institutions. Unlike the blind men, they face many restrictions on how they store, manage and share data that, until recently, have made it impossible for them to build a comprehensive picture of their customers and operating environments.

The value of the whole of data is greater than its component parts, but capturing this value is fraught with complexity and conflicting goals. For example, by sharing data, financial institutions would be able to better identify patterns that suggest transaction fraud, leading to fewer false positives in the detection of financial crime.

However, they are wary of disclosing valuable competitive intelligence on their customer base, and of creating tensions with privacy regulations. It is important to note that it is not only financial institutions that stand to benefit: By sharing data, customers would be able to benefit from more personalized, specific and nuanced advice. However, they are wary of their data being misused, abused and shared without their consent.

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This document is intended for use by executives at financial institutions across subsectors (e.g. insurance, banking, investment management); it provides a high-level overview of how these privacy-enhancing techniques work, and the value they can unlock within financial institutions.

In this White Paper, we will:

Chapter 1: Take a closer look at the tensions surrounding
privacy in the context of the financial sector

Chapter 2: Understand how several privacy-enhancing
techniques work

Chapter 3: Demonstrate how they could be used to enable
new types of data-sharing

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