Smart Data and Open Banking: Transforming Ecosystems for a Better Future with Heather Xiao, CEO and Founder of Horizon Zero

In this episode of Banking on Information, Heather Xiao, Founder and CEO of Horizon Zero, discusses the transformative potential of smart data and open banking. She emphasizes the importance of customer-centric frameworks and the need for alignment among stakeholders in the ecosystem. Heather shares insights from her experience working with various sectors, including banking and airlines, and highlights the value her clients gain from her expertise. Looking ahead, she envisions a future where open banking and smart data significantly enhance customer experiences and societal benefits, while acknowledging the challenges that lie ahead in standardization and collaboration.

Keywords

open banking, smart data, data sharing, customer experience, future of finance, technology, innovation, ecosystem, regulatory standards, financial services

Takeaways

• Smart data and open data sharing will transform lives.
  
  
• Frameworks are essential for understanding open data.
  
  
• Alignment among stakeholders is crucial for success.
  
  
• Customer experience should drive product development.
  
  
• Emerging technologies will accelerate open banking evolution.
  
  
• Collaboration across sectors is necessary for innovation.
  
  
• Practical solutions are key to addressing customer needs.
  
  
• The future of finance will be more equitable and efficient.
  
  
• Standardization is vital for the success of smart data.
  
  
• Incremental progress will lead to significant outcomes.
  
  

Chapters

00:00 Introduction to Smart Data and Open Banking
02:30 The Role of Frameworks in Open Data Sharing
05:59 Client Success Stories and Value Creation
09:56 Future Vision: Open Banking and Smart Data in 2035

Transcript

Rutger van Faassen (00:01.197)
Hello and welcome to another episode of Banking on Information. Today, my guest is Heather Xiao, who's founder and CEO of Horizon Zero and an expert on open banking, open finance and smart data. Welcome, Heather, to the podcast.

Heather Xiao (00:18.68)
Thank you, Rutger Really nice to

Rutger van Faassen (00:20.682)
Now we always, yeah, it's great to have you on. We always start with this very important question, which is why do you do what you do?

Heather Xiao (00:30.156)
Yes, that's really a good question to start with, Why? So what I do, I developed a customer-centric ecosystem driven framework, research framework for smart data. So that's what I do. For people who do not understand, maybe not quite aware of smart data, basically it's an extension of open banking and open finance.

the sharing the customer data to trusted secure trusted third parties and through the data providers and create innovative solutions and customer experiences. this is what I do. Why do I do this? think there are actually the reason, there are a few reasons. One reason is that I truly believe smart data and open data sharing will.

transform our lives and transform our business models in the future is going to have very profound impact to our society through data unification. I can explain that further and maybe later on today. Then that's the reason that drives me and also the company I founded and also the team I have been working with in the ecosystem.

And then personally, the reason why I want to do this is because I have been working in this open data sharing for the last 10 plus years. And I think that what really tantalizes me is that I felt this is something none of us has worked out everything yet. So it's really something for us to explore. And that's why I feel it's so important because we can be the person or we can be

Rutger van Faassen (02:12.225)
Yep.

Heather Xiao (02:22.188)
you and me and many others can help to make the future happen. So I felt it's something very meaningful for me. So why I do it.

Rutger van Faassen (02:30.763)
Yeah. Yeah. So you are an explorer and you like to lead the way by providing frameworks for others to help them understand how to to leverage open data. That is a great why to have. Now talk to me a little bit more about what it is that you do with that framework and with your company. What are the typical things that you help your clients with?

Heather Xiao (02:53.9)
Yeah, yeah, thank you. Yeah, so I think I've been working in this field for a while, and I felt the element that I could bring is to help to address a gap that I see and also many others also see in the ecosystem. So I have been working in different areas of open data sharing for the last decades.

I have been working in banking. So I used to be the head of open banking, API banking at Standard Chartered Bank. So I understand the bank concerns about open banking. And I also have been working with OBL, OBIE, as their Chief Product Officer. so on the regulatory side, in standardization side. So I also understand from regulatory, more from regulatory point of view,

how it is important to have the standards, while not having the standards to stifle innovation. And I have also worked with the airline, for example, on airline data sharing. I used to be in the API integration for Qantas Airlines. And I experienced how airlines actually is such a big ecosystem, very similar to open banking actually, to share data across the different airlines, airport, customers to make

to have the culture between the airlines to really create better experience for the customer. However, the gap I found is more of a fragmentation or industry misalignment. I've been part of Future Entity Working Group about more than a year ago to look at how do we extend the benefit of open banking and there's many parties in the ecosystem, including the banks.

and in regulatory bodies and in the business associations, industry associations. I found that everyone wants to progress open banking, but the challenge we need to go through is that we need to align our thinking about how do we galvanize our products and services together to create customer benefit. And that is actually something, in my view, is a bit new because

Heather Xiao (05:17.758)
for many decades we want to align business with customer needs, so customer business and technology. But now, because open banking and open data needs an ecosystem effort, that's why in UK, for example, we could talk about UK PLC, across the borders, then we talk about how we can use our services to connect with others and connect with innovators, FinTech and different...

other countries to make customer benefit from. So we really need to have the ecosystem thinking, aligned thinking. So that's why I found this framework is very, very important.

Rutger van Faassen (05:59.795)
Yeah, so you have a great perspective from the different lenses and the different viewpoints. And I think that is important, especially when we're trying to do something new, right? That you have this understanding both from a regulatory perspective as well as from a bank perspective, as well as from an airline perspective, right? So how that's done. And I can see that that can be very valuable for your customers, right? To have that perspective and be able to bridge those different stakeholders and those different perspectives. Now, when your customers talk about when they work with you,

Heather Xiao (06:24.685)
Yes.

Rutger van Faassen (06:28.484)
how did they say they get value from it? So maybe you can give me a story of someone that you worked with and they sort of said, hey, it was so great working with Heather because she did this for us.

Heather Xiao (06:35.854)
Yeah, sure. I have been working with different players in the ecosystem, although my company is very small, so it only started last year, so we are still in the very beginning stage. But I've been working with different customers, including the customers in the banking sector, telecommunication and energy, etc. as well, to help them envision the future strategy, data strategy.

Rutger van Faassen (06:58.59)
Mm-hmm. Yeah.

Rutger van Faassen (07:03.112)
Right. Yep.

Heather Xiao (07:03.886)
Then for example, one of the banking customers I have been working with, they are a big bank and they are very forward looking, wanting to see how they can use smart data and open finance to extend further benefits and better experience for their customers. However, as you know, banks, they also have their own very...

immediate need is to generate value for the business so they can sustain. And they can not only sustain, but also in the coming one, two, three years, they can see how smart data can generate value for them. So that's key concern for banks to see how we can commercialize at the same time create value for the goal, for the customers. that's how we started in mind. I have been working with them

on how do we align the vision, which is create customer's benefit, with their execution, which is the product or capabilities they have. And a lot of capabilities, different categories of capabilities that include technology, product, and their business models. How do they work with partners? How do they work with regulatory? And also there are other...

areas of that capability that support this, including how do we leverage AI, other emerging technologies to accelerate their open banking and smart data development, as well as how do I sync up my glossary? So how do I call smart data? How do I call this digital identity with others so that everyone is aligned together with learning from

other industries and other countries. So there's so much to do, but I think that the the core is that we need to have a very simplified approach to create this technology so that to create this product so that the bank can not only create the future vision for the customer, but also realize immediate value to say this is the high input and how do I do it? I think the key is to look at the customer experience is always the key. So what are the customer journeys of

Rutger van Faassen (09:24.283)
Ahem.

Heather Xiao (09:26.36)
for specific group that your customer can benefit from using smart data. looking at the customer value chain on different things that are onboarding customers, know, settlement and other banking, like lending and mortgage and other banking, customer banking needs. By doing that, we can create more information for the customer. that's my customer has been happy about me working with them because

I think we need to be practical to address what is needed by the customers.

Rutger van Faassen (10:03.32)
Yeah. Yeah. So I can, I can see that they get lots of value from having your expertise and helping them chart a future strategy, but also think how there can be benefit today. And it's actually a great bridge to my, my, my last question. like to do this thing called Futures Thinking and it sounds like you do this all the time thinking about the future. So let's think 10 years out. We don't know what the future is going to be 10 years from now, but let's, let's imagine what it could be. in 2035,

Where do you think the market is for open banking, open finance, smart data? Paint us a possible picture of what that looks like.

Heather Xiao (10:30.541)
Yes.

Heather Xiao (10:38.574)
I think emerging technology has been developing so fast in our society. it almost feels like many of them are like a wild card. Sometimes it's very difficult to imagine in 10 years where we will be, but it will be very, very different for sure. And I think also with the hot technologies like AI, cetera,

open banking and smart data will be hugely influenced by it as well. So it will accelerate the way it develops. I think providing that we make it secure and then to lead the technology to provide good for the society. I think in 10 years time, I would see that smart data or this open data sharing across the world would really help us to

transform our lives in a very significant way. Like for example, if you look at different sectors, like for example, energy sector, then we could use, unify the data so that we can use energy in a more cheaper and more sustainable way, enable vulnerable groups to be able to consume energy and, like in a fair way as well so that we can

achieve much better good for using smart data. And also, for example, we can buy a house in a much streamlined way rather than today. By the way, this actually needs a huge amount of work. It's a really great vision, but when you look into it, by having this vision, then we need to have changes from the banks.

from the lending companies. And they all digitize, create the API, standardize, and also from the consumers. And so people need to be aware this is good. So the whole ecosystem have to galvanize itself to achieve that vision. Then other things like retail, we can shorten the, well, we can,

Heather Xiao (12:59.448)
Sorry, we can use very personalized service for customers. So retail can create like a grocery list and services much better to support our health. Medical services, we can improve the efficiency of the hospitals. They can provide services that can be preventative rather than using technology or APIs to immediately.

to create services in real time rather than today. So there's so much to be achieved. I think the future is brilliant. What can you say? But provided that, we actually use our technology and the smart data APIs in a very ethical way. And also think about how we can direct it to an

Rutger van Faassen (13:30.373)
Yeah. You're right.

Rutger van Faassen (13:39.598)
Right? Yep. Nope.

Heather Xiao (13:53.646)
to prevent fraud, to make people trust the services and mature our capabilities.

Rutger van Faassen (14:00.825)
Yeah. Now that's a great, that's a great vision. So everything's going to be more efficient, more equitable, right? Like more people are included in the system because of smart data. it'd be easier to buy a house. will be more personalized is what I hear you say, right? And therefore you can also do preventative things instead of fixing things after the fact. but to do that, we do need to keep going on the standardization of the data. right? And everyone does need to buy into.

open data and create the APIs to do that.

Heather Xiao (14:33.774)
Yes, absolutely. And actually, I see this is quite a very long journey because open banking took us, has been taking us seven years, not seven months to get here. Then imagine smart data extend the payment sector into the holistic open finance, into many, many other sectors, medical, transport, telecommunication. So it's a huge scope. I think 10 years probably is not enough to, definitely is not enough.

Rutger van Faassen (14:45.464)
Yep. Yep.

Rutger van Faassen (14:54.862)
Yep. Yep. Yep.

Heather Xiao (15:03.758)
to make this mature. But maybe with other emerging technology, maybe this could be accelerated, which I can't see at this moment. But I think it's, anyway, it's quite a journey for requiring a lot of effort to be in the ecosystem. So I think to be able to achieve that for today, we shouldn't be fearful about how long it will take, but more about how much impact can we create

Rutger van Faassen (15:03.79)
Right. Yeah.

Heather Xiao (15:33.134)
and from now. So let's not boil the ocean, but look at what problem can be solved for the customers. Like for example, you know, how do we help the elderly people in winter to have more heating services, you know, using data sharing, for example, just by having that small group of people benefit, not very small, actually, but you know,

a big enough group of people benefiting from the leverage of smart data. And we can receive their trust and also receive better customer adoption. And then we can perfect our services, mature our capabilities. Then problem by problem, invention by invention. Then I think accumulating that over the years, we'll be able to achieve the outcome we want to have.

Rutger van Faassen (16:26.681)
And that I think is a great point to wrap it up. So we still have a long way to go, but we should go like use case by use case and also get some benefits, now. it, was a great, I think pointed wrap it up on thank you very much, Heather, for being on the podcast.

Heather Xiao (16:42.429)
thank you so much, Rutger and I really appreciate your effort. Yeah, and for the ecosystem. And thank you so much for inviting me.

Rutger van Faassen (16:49.635)
Perfect. Thank you so much. And until next time, choose to be curious.

Heather Xiao (16:55.447)
Yes.