Data and the information pay-off

“Information wants to be free”, one of the most enduring internet memes, is often attributed to Steven Levy in his 1984 book Hackers.

But as Levy himself explains it was the Whole Earth Catalog’s Stewart Brand who first uttered the phrase in a panel Levy was on.

"When it comes to information, what should you pay for and what should be free for the greater good?"
Andrew Cornell, Managing editor, BlueNotes

“On the one hand information wants to be expensive, because it’s so valuable,” Brand said. “The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

Provenance aside, the debate is as live as ever as some banks argue with Apple over access to information technology, non-banks argue with banks over data information and infrastructure access and many ask why governments don’t make more of their information available for free.

Brand’s is a pretty good description of a whole range of intellectual property debates, from copyright to patents. It boils down to balancing the need for IP to generate a return in order for there to be an incentive to produce it with the wider benefits to society of that IP being available for broader use (and improvement).

It’s a critical debate for the banking industry, for the regulatory sector, indeed for a whole range of public policy. When it comes to information, what should you pay for and what should be free for the greater good?

Under an “open data” regime, as envisaged in the UK’s Open Bank Project, banks are required to expose and share previously internal-only data with customer-authorised 3rd parties. In Australia, the Productivity Commission is inquiring into open data across the community, not just banking,


One debate is that over ‘open APIs’ – application programming interfaces. If APIs are public, any programmer can develop apps that work with proprietary software, such as Android for example.

In return for giving up proprietary rights, the software owner encourages greater engagement and a diversity of programs using it which increases the customer base.

But in giving up proprietary rights with a public API, the owner gives up any benefits which may accrue to that exclusivity – in the hope of a bigger pie of returns to share.

A particular case of this is playing out in the Australian courts at the moment as a group of banks are attempting to force Apple to make its NFC (near-field communication) technology on iPhones available to non-Apple apps. In this case so a phone could be used as a payment device for payment apps other than Apple Pay. (ANZ, the only major bank to offer Apple Pay, is not involved in the action.)

The Australian banks are seeking permission from the Australian Competition and Consumer Commission to collectively negotiate with Apple over an access arrangement. Apple counters that opening its platform to all-comers would compromise the iPhone’s security, curb innovation and stymie its entry into the payments market.

However that case goes, many in the industry believe open APIs will eventually be the norm as the benefit of more products tapping a broader audience outweighs exclusivity. For banks and other companies with big legacy systems, open APIs can short-circuit the complicated and expensive need to integrate multiple layers of new technology with old core systems.


According to ANZ’s chief information officer Scott Collary an “API can be written directly into a core banking platform running on the mainframe in half the time and for a fraction of the cost of what it used to require for integration”.

Many disrupter companies such as financial technology start-ups (fintechs) want this principle applied more broadly: give us access to your stuff and we’ll make it better for everyone (including us).

Fintech Australia chief executive Danielle Szetho argues banks are restricting innovative companies from gaining access to customer data - even if the customer wanted the data to be transferred.

“This is why Fintech Australia is advocating that government implement a principles-based regulatory framework that doesn’t allow companies to restrict access to economically important infrastructure,” Szetho wrote in an editorial for The Australian.

“Open access does not equate to other slather, unregulated and insecure misuse of consumer information. Open access is about removing company-imposed, self-interested restrictions and putting consumers in control, to have the freedom to pay how they want, to transact how they want, and to instruct institutions to share their data with whom they want.”

The debate here is relatively straight forward: access to data and infrastructure would help fintechs build and scale disruptive technologies but that same data and infrastructure is potentially a competitive advantage for banks and hence one they are reluctant to give up. Unless there is a bigger pay-off from efficiency or more satisfied customers or new products.


In the case of governments however the case should be clearer. But take access to regulatory filings. In New Zealand, for example, the Companies Office has a free, easy to use search page allowing anyone to search companies, directors and shareholders.

So a quick search of John Key, a reasonably well-known Kiwi, reveals a list of companies of which he was formerly a director, presumably until he became prime minister. Richard Hugh McCaw reveals a pack of companies including Richie McCaw Ltd, incorporated in 2004 (and obviously a good one to have got on board with early).

Click image to zoom Tap image to zoom

Richie McCaw: a good one to have got on board with early. Photo: Getty Images

But when I was at a business newspaper and budget cuts started, an early victim was our account with the Australian equivalent, the Australian Securities and Investment Commission’s registers.

Here a current company extract costs $A9, a roles-and-relationships extract $A38, a current and historical Australian registered body extract $A19. It soon adds up when you’re trying to get to the bottom of complex company structures or little-known company officers.

This cost is not just a burden for nosy journalists, for a small business offering terms and conditions to customers – ultimately a form of credit – cheap-and-easy access to financial data and director information could be critical in decision making.

New Zealand has clearly made the call that such information should be free and the broader benefits to the economy outweigh the cost of running the data base.

South Australia made an even bigger commitment with its geological surveys of mineral deposits in the state. In conjunction with the Geological Survey of SA, Geoscience Australia and AuScope Australia, the PACE initiatives make available for free a huge amount of geological data, encouraging explorers and producers to commit more investment to the state’s resources sector.

 While the surveys have cost over $A40 million to date, the return to the state has been far away in excess of that, in the billions according to the government.

Junior explorers for example – the start-ups of the resources sector – have particularly benefitted from access to geoscientific data they could not possibly have obtained themselves.

The open access to data debates will be among the most important to get right but it would be wrong to just see them a discrete cases, whether Apple or customer data. Network economics is rarely clear cut.

The bank for which I work, ANZ, has made the call its customers would benefit more from a commercial arrangement with Apple than seeking to force access.

Policymakers need to balance potential benefit for the economy against costs to taxpayers, information security and if they intervene in a market, the need for creators of intellectual property to gain a return on their investment, whether that is data or the infrastructure to use it.

Andrew Cornell is managing editor at BlueNotes

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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