Steam was the lifeblood of the Industrial Revolution, powering locomotives, factories, and ships. But with its immense power came danger - boiler explosions were common and devastating.
Fast forward to today, and financial data is the fuel driving financial service innovation. But as steam explosions were once a fact of life, data breaches and fintech failures have become a modern reality, shaking public confidence.
On April 27, 1865, the steamboat Sultana exploded on the Mississippi River, killing over 1,800 passengers. This disaster underscored the need for stricter boiler safety regulations and marked a turning point in the standardization of industrial safety. In the financial sector, a growing number of data breaches served as a similar wake-up call.
In 1857, a group of engineers and scientists formed a polytechnic club to design a better steam engine. They reasoned that inspections would increase boiler safety, and the insurance would function as an incentive to inspect and a guarantee of a quality inspection. This initiative established standards for the U.S., forming the Hartford Steam Boiler Inspection and Insurance Company (HSB).
Similarly, the data revolution has faced its own struggles. The lack of secure, standardized ways to share financial data left the ecosystem vulnerable to data leaks, fraud, and inefficiencies. To address this, the Financial Data Exchange (FDX), an industry standards body, was formed, bringing together North American banks, fintech firms, and technology providers. In October 2024, the Consumer Finance Protection Bureau (CFPB) announced Section 1033 of the Dodd-Frank Act, and in January 2025, FDX was recognized by the CFPB as a standards-setting organization for Section 1033 of Dodd-Frank.
From steam to data, history has shown that progress requires both innovation and safeguards. Just as the HSB proved that steam power could be harnessed safely, Invela is leading the charge in protecting the exchange of financial data through efficient and scalable third-party risk management and insurance coverage for open banking. The lesson remains the same: innovation comes with great responsibility. In the ever-evolving landscape of open banking, the continuous validation of credentials, adherence to proper standards, and insurance coverage are crucial and urgent.
Open finance, covered.
