ASEAN Banking Interoperable Data Framework (IDF)

Background

As a proof of the rapid pace at which digital transformation is taking place, the World Economic Forum projected ASEAN’s digital economy to grow significantly, adding an estimated $1 trillion to regional GDP over the next ten years. Also, in ten years’ time, digital technologies in ASEAN could potentially be worth up to US$625 billion (accounts for 8% of ASEAN’s GDP for that year). This may be derived from innovation in products and services, improved efficiency and cost management and many more.
A discussion was held with the ASEAN Central Bank Governors’ and CEOs Dialogue in March 2021 on the benefits of data interoperability across ASEAN Member States. On the basis of the benefits, the ASEAN Central Bank Governors and CEOs supported the formation of a Taskforce to develop an ASEAN Banking Association’s Interoperable Data Framework (IDF). 

Benefits of an ASEAN Interoperable Data Framework 

The benefits of an ASEAN Interoperable Data Framework across ASEAN are as follows:

• Innovation of new products and services that will benefit especially the underserved and underbanked - Data collected, processed and stored within the institution and flowed on a secured basis can allow a stronger form of meaningful analytics to generate insights on the underbanked and underserved customers, as well as the relevant products and services specially to cater to their needs.
• Accessing a more comprehensive suite of information that would influence decision making - Increased data connectivity enables organisations to use common infrastructure to serve multiple markets, so digital goods and services spread to customers more rapidly, which correspondingly increases customer choice and satisfaction.
• Improving overall transparency and integrity of the information being shared- Enhanced cross-border data flows provide more scrutiny on the quality of data being shared, and more information must be provided by institutions on the data sources, which increases the level of rigour in overseeing and managing data.
• Improving efficiency and compliance for AML/CFT programs - Two of the ten ASEAN Member States have instituted a national e-KYC utility in the recent 2 years, demonstrating an increase in demand for a cost-effective and efficient way of checking against sanctions and blacklists. Cost efficiencies can be further improved where such efforts are coordinated regionally across the Member States beyond efforts locally within.

The ABA Interoperable Data Framework Taskforce (“Taskforce")

The Taskforce was set up in July 2021 and was formed under the Cooperation in Finance, Investment, Trade and Technology (COFITT), the Permanent Committee of the ASEAN Banking Council. It comprises members from different national banking associations representing each of the 10 ASEAN Member States. It is also supported by advisors from the ASEAN Digital Sector’s Data Management Framework Committee as well as subject matter experts from the Enterprise Data Management (EDM) Council. 

Vision and Objectives

The Vision statement was established as “to facilitate cross-border flow of data in a safe and secure manner for the banking financial institutions within ASEAN Member States.”
Three key objectives were defined:

1. Foster innovation in financial services - it aims to improve the financial inclusion through greater exchanges of information through trusted data flows which drive transparency in credit worthiness and risks and promote increased trust. With the innovation fostered, it increases customised services and processes to cater for different market segments.
2. Establish interoperable standards for data sharing – the standards help to Improve integrity of information shared with agreed standards of data quality and metadata. Such data standards increase consistency for data collection and data processing and drive greater accountability and transparency on use of data.
3. Foster collaboration - this encourages a culture of collaboration to drive efficiencies and effectiveness through data sharing, such as in financial crime and fraud detection etc.

Design Guiding Principles

The design guiding principles were researched and aligned to multiple international cross-border data sharing frameworks and the ASEAN Data Management Framework. The development of the Framework will be underpinned by the following design guiding principles:

1. Trustworthiness – it aims to create a trust environment in the data sharing ecosystem and across the data lifecycle, by ensuring best practices around data security, data quality and integrity are adhered to. This would require parties to an interoperable data agreement to put in security controls to prevent unauthorised access or theft by malevolent forces, and handle data  in compliance with local regulations and used in accordance to the prescribed purposes. To ensure that data can be trusted, data integrity and quality must be ensured throughout the lifecycle.
2. Practicality – The Developed Framework and related guidance / standards should be technology- agnostic, be economically viable for implementation and easy to do so.
3. Standardisation – data quality and metadata standards are baselined for collaborative and consistent applications. Where relevant industry best practices and open technical standards are available, these are encouraged. To the extent possible and required, individual Member States have the discretion to supplement the Framework with complementary local standards.  
4. Openness – data should be legally and technically open to authorised parties for the prescribed purposes of use and the use of such data, enabled by cross-border flows, is encouraged. 

Conclusion

While digitisation and advanced data analytics are creating important opportunities for ASEAN banks, they also render long-standing business models obsolete, as new entrants compete aggressively to chip away market share from incumbents. Therefore, Banks must “disrupt themselves,” shifting from old to new models and ways of working, all while increasing revenue and extending market share. Frameworks and policies can help level the playing field by ensuring that minimum standards are adhered to, and overall a consistent capability uplift within the ASEAN banking sector.
 
The Taskforce has completed the ASEAN Interoperable Data Framework and related guidance documents in 2022 and is in the process of validating and implementing the Framework using shortlisted use case(s). The Taskforce will work closely with the regulators of the member states to understand and highlight any gaps to achieving the interoperability of data.  

Resources

The hyperlink to website is http://www.aseanbankers.org/ABAWeb/index.php/2016-07-19-05-00-39/aba-idf