Need to know about Open Banking? This article is a good start in appreciating the changes Open Banking is likely to bring to the industry. finPOWER will be at the fore of any changes and will ensure you are kept abreast of the changes.
1. What is open banking?
If you haven’t heard about open banking, this is what you need to know to get up to speed. Open banking is on the horizon for Australia and will allow consumers to share their transaction history to get better deals.
This changes the game completely, as it gives power back to the consumer by seeing banks evolve from a traditionally closed model to an open one. Open banking will cause a huge shift in retail banking as it will need to keep up with the modern day consumers who will expect products and services tailored to them.
2. When will open banking be introduced to Australia?
Open banking will be gradually introduced to Australia in February next year. During the first phase, the ‘big four banks’ will have to share data with their customers relating to credit and debit cards, deposit, transaction accounts, and later mortgages. All other banks will be given a 12 months grace period to fully embrace open banking and get on board.
3. How safe is open banking?
One of the major concerns with open banking is cybersecurity and data privacy, as the sharing of data will need to be completely secure in order for banks to comply with Australian regulation.
To improve the security of data sharing, Australia has already introduced something called the Notifiable Data Breaches (NDB) scheme. This scheme goes hand in hand with the Privacy Act (1988) to make sure all agencies and organisations involved in handling personal data are held accountable.
This new legislation will shine a spotlight on ensuring personal information is stored in the most secure manner with serious consequences if data is breached.
To top that, the Consumer Data Right (CDR) was put in place to put the consumer first when it comes to personal data.
Another layer of safety can be seen through the Australian Competition & Consumer Commission (ACCC) who over the next four years will develop policies to protect data exchange, which will be pivotal to Open Banking. The ACCC will also make sure that the Consumer Data Right is implemented across all Australian organisations.
A lot more legislation is expected to follow to support open banking and ensure Australians are in safe hands.
4. What will open banking mean for consumers?
Australia will follow UK’s lead, as well as parts of Europe and Japan as they’ve already implemented open banking into their economy.
Ross Sharrott, Founder of Moneytree, who was involved in Japan’s open banking roll-out, says that Australia has a real opportunity to be leaders in this field in creating a stronger economy which uses open data sharing to benefit its people.
Sharrott explains that it all comes down to the consumer, saying, “Consumer centricity is the big change, because there has always been financial technology. The idea of a fintech company, usually means bringing a consumer centric approach to a more traditional model.”
Moving towards an economy that embraces open data sharing has the potential to create a brighter future focused on improving the consumer’s experience.
Gaps will be exposed, traditional business models will be forced to create room for innovation and people will be empowered.
5. How will open banking affect the future?
The biggest thing open banking will do is create more choice, which produces more flexibility for people wanting better products.
Open banking won’t just touch the banks, but the idea of open data sharing will eventually flow into energy, telecommunications and other services.