The four major banks had a deadline of 1 July to make product data available on all credit and debit card, deposit and transaction accounts.

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By February, first mortgage data will have to be available with eventually, by 2020, all products being available for the major banks. The start date for all other banks to begin with offering their credit and debit card product data is 1 July 2020, with an end date of 2021.

Customer data will be included in the regime by 1 February 2020, which will allow consumers to more fully control their data, which will enable greater transparency and competition throughout the industry.

Open banking has been sweeping across the world, with the most relatable example for Australia being the UK open banking regime.

The UK introduced its regime following an exposure of poor practice, not dissimilar to Australia, where it differs though is that the UK regime applies to only nine banks, but Australia’s will apply to all ADIs.

The Australian regime grants read only access to data with reciprocal obligations and an eventual plan to open up to other industries such as utilities.

What it will eventually mean is that customers of a bank can request or give consent for their data to be shared with an accredited third party such as a bank, financial services provider, utility provider or a telecommunications provider.

The regime will break down the barriers consumers have faced in finding the best banking products and eventually switching to that provider.

Deputy chief executive of Volt Bank Luke Bunbury said it will mean that the incumbent banks will need to innovate to compete with newer entrants.

“This means the incumbent banks will have to innovate to compete, as there will be a long line of fintechs and neobanks like Volt wanting to harness this data to offer customers a superior banking experience,” he said.

“Customers will be the masters of their data, and third parties will have to earn it by being innovative and trustworthy.”

Part of this was changing the narrative by offering an improvement to lives and not just the sale of products, said Mr Bunbury.

“Volt and other innovative banks will be able to help Australians find and secure better deals on a range of banking and even non-banking services, like utilities and travel,” he said.

“By enabling data to be shareable across financial institutions, it will be also possible for customers to manage multiple bank accounts from one mobile app, regardless of whether the accounts are held with rival banks.”

Chief executive of Verrency David Link said the regime was going to eventually drive greater innovation, but it was not today.

“While 1 July 2019 will not drastically change the way Australians bank – as only product, rather than customer, data will be available until 1 February 2020  this is a huge step towards that much more transformative change,” he said.

Banks would have to start to offer a personalised consumer offering, said Mr Link, and those that are agile were going to thrive.

“The effective use of data and access to new value-added services will slowly become a major decision-driver for consumers when it comes to choosing or changing who ‘owns their relationship’,” he said.

“Banks which don’t take this extremely seriously are going to slowly struggle to remain competitive. On the other hand, those which take steps to become more agile – especially in their ability to deliver value around the consumer relationship are going to thrive in the post-open banking landscape.”

Incumbents response

Commonwealth Bank’s general manager digital banking Kate Crous told Fintech Business that the bank was supportive of the model that put customers in control and had worked hard to ensure it was ready.

“We have worked hard with regulators and other industry participants to ensure the consumer data right regime will be successful, particularly in building consumer trust and confidence around the use and exchange of their data,” she said.

“The first milestone is publishing product information via an application programming interface (API) from 1 July 2019. This will enable an easier comparison of banking products from financial institutions and allow the industry to test the APIs before sharing consumer data next year.”

Ms Crous said now developers were able to access information on how to integrate with the CBA APIs.

A NAB spokesperson told Fintech Business that its focus was on ensuring that as an industry, open banking worked for the consumer and admitted it was a complex change.

“This is a complex change to the industry and the timelines are challenging, but we firmly believe that speed shouldn’t compromise safety and customer experience; getting it right is paramount to consumer trust and confidence in the system,” NAB said.

NAB said it had actively started to develop processes since 2017 to be ready for open banking and would continue to work with Data61 and ACCC.

Westpac’s chief data and strategy officer Jamie Twiss said keeping data safe was crucial and the pilot was an important step.

“Westpac is focusing on creating a trusted open banking regime that is secure, flexible and easy to use for all Australians. The pilot program will lay initial foundations to test the performance, reliability and security of the system before any personal consumer data is shared. It will also give software developers and fintechs a network of financial institution’s data to build and improve financial services,” Mr Twiss said.

Westpac will provide generic information on product data as of today, which will include interest rates, discounts, eligibility criteria, product features and descriptions plus fees and charges.

 

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