The future lies in Open Finance, trust, and digital identity
We are seeing a growing appetite for better and more user-friendly applications of data across every sector – and the pensions industry is no exception. In the United Kingdom (UK), the government has proposed the implementation of a pensions dashboard that will provide a simple, intuitive interface for citizens to monitor and manage multiple pension pots from a single platform.
With as much as £20bn currently in lost pension funds in the UK alone, it is obvious that the pensions industry must find a way to reconnect people with their savings. With digital channels rapidly becoming the default for how we engage with and manage our finances, a pensions dashboard is a logical solution.
ForgeRock has teamed up with pensions specialist Origo to develop and test a workable solution for a pensions dashboard based on the User Managed Access (UMA) protocol. We recently co hosted an event with Origo to discuss three key questions:
How close are we to seeing a pensions dashboard become a reality?
What do we need in order to make it happen?
What can this tell us about the future of Open Finance?
We’re seeing progress
On the political side, there are encouraging signs. The new Pension Schemes Bill includes a dedicated section outlining a framework to support pension dashboards and compels pension schemes to provide accurate information to consumers.
Progress has also been made by the Money and Pensions Service (MAPS) Industry Delivery Group towards drawing up a robust delivery model with the appropriate governance. The MAPS group has come a long way since the project began in 2016, but important questions still remain:
How should the development be phased?
Should we have one single state-run pensions dashboard or multiple commercially run dashboards?
Crucially, the technological solutions have come along even further, and ForgeRock’s work with Origo has already delivered a viable pensions dashboard model that has been tested for 15 million users.
Digital identity is the key to unlocking innovation
This bright, promising future would not be possible without digital identity, which is fundamental to three crucial elements of a successful dashboard: trust, ease of use, and security. These three pillars are essential if users are to incorporate the pensions dashboard into their busy lives, while safely and responsibly accessing the nation’s pensions data.
The pensions dashboard can only succeed by empowering users to provide explicit consent for sharing their pensions data with their financial adviser in a trusted, controlled manner. The User Managed Access (UMA) model is the authorization protocol that makes this possible, allowing individuals to be highly specific about what information they share and under what circumstances. UMA also makes it easy for users to revoke access whenever they choose.
Another point raised at our event was the importance of data quality. The pensions dashboard has a robust foundation of customer data that provides positive matches upon request. This has implications for both the user experience and overall security. If the wrong data records are returned, the consequences would be dire and likely to damage adoption.
Again, identity is a critical factor. Although the data sets held by most providers are in need of improvement, by providing critical OpenAPI security, consent capabilities, and a consistent user experience, a robust, modern identity system will allow different pensions data sources to work together harmoniously and securely.
Open Finance: The pot of gold at the end of the rainbow?
By using digital identity to create a secure, trustworthy, and user-friendly tool, the pensions dashboard can democratize access to financial advice and make it easier and simpler for all of us to engage more meaningfully with the process of saving for retirement.
There is still much work to be done to deliver an effective pensions dashboard, but the industry is already starting to look ahead to how the same principles could be applied to a wider Open Finance initiative that would allow consumers to take back control of all their financial data and enshrine data ownership as an economic right.
At ForgeRock, we are excited about the potential benefits of Open Finance, not just within pensions but across all aspects of financial services. The pension dashboard’s architecture – federated digital identity, UMA, and interoperability – can provide a viable model for Open Finance more generally. Through a healthy cross-pollination of standards and technologies built on secure open APIs, the pensions dashboard could extend the value generated by Open Banking. It can enable financial advisors and brokers to deliver important financial advice through a more complete, immediate, and easily visible financial statement.
This broader vision is only possible if the final pensions dashboard model is built on open standards. By allowing for unlimited interoperability and creating more choice and flexibility for providers, a pensions dashboard based on open standards could become the foundation for a connected ecosystem that encourages healthy competition and innovation while putting the consumer firmly in control of both their finances and their data.
For more information about ForgeRock’s work in Open Finance, please visit: https://www.forgerock.com/industries/financial-services