The need for data products in personal finance

Current healthcare, education and retirement trends require households to increasingly leverage financial investments products. But to date, their distribution chains remain so costly and inefficient that those products are not easily accessible. A sizeable opportunity for transformation thus lies here. And the digitalization and standardization of financial information, notably through the structuration of data products & models, certainly has a role to play. This paper hence describes the kind of impact this change could have thanks to standard techniques stemming from option and game theory and evaluates its magnitude in the context of one of the Big 5 European financial market, namely France. Results are twofold. On one hand, the models used in this article show that standardizing financial information associated with financial investments products through a unified data model can yield a 10 to 20% productivity increase for financial advisors and brokers distributing those instruments. The gains will likely be passed in some form to households, thereby increasing the overall efficiency of the financial system and supporting households’ financial professionalization. On the other hand, the models highlight that the standardization of information at a local level remains sub efficient when led in a private fashion. A market of the size of France can indeed only support two data product suppliers, who will present a large asymmetry in prices (prices differ by a factor 2 or 4 between actors) and provide a standardization for about only 60% of the overall information available.