Data and the information pay-off

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,

OPEN APIS

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.

WRITTEN DIRECTLY

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.

CLEARER CASE

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).