- The number of data providers and those accredited to use data feeds might not be as large as hoped when open banking launches in July next year.
- Experts say the timetable to get that accreditation is tight with legislation still to be passed and rules to be drafted.
- However, the big banks and some smaller players are expected to be ready on the launch date.
The launch of open banking in Australia, due by July next year, may not immediately bring widespread availability of personal financial data from financial institutions.
Experts attending FinTech Australia’s annual conference, Intersekt, in Melbourne say the data available might at two levels, one a best practice feed and others at some lower point.
However, they hope Australia can do better than the UK when only six providers were working on the launch date for open banking.
Privately they say that at least the big four banks and some of the smaller, regional banks will be ready in Australia.
Macquarie bank is already making data feeds available to its customers.
And international banks are also known be getting ready for opening banking in Australia, hoping to take market share from local banks.
“There’s an awful lot to do in a tight timetable,” says Scott Gregson, an executive general manager at the consumer watchdog, the ACCC, one of several regulators involved in open banking.
“I am not saying it is without risk or challenge.
“There’s a lot pressure, a lot of tension in the timetable, but we are suitably comfortable that we’re heading the the right direction for July 1.”
This Friday the Data Standards Body will release its draft standards for open banking.
Also, legislation still has to pass the federal parliament.
But the key question is which providers will be eligible on July 1 to receive data from the banks and then provide services to customers.
Open Banking is being implemented as part of the Consumer Data Right in Australia following a recommendation by the Productivity Commission’s Data Availability and Use Inquiry.
The July deadline next year, set by the current Coalition Government, will mean bank customers can direct their information be shared, including deposit accounts, debit and credit cards, mortgages, personal and business loans and transaction accounts, with third party providers.
Open Banking is being phased in, with the four major banks making data available on credit and debit card, deposit and transaction accounts by July 1, and mortgages by February 2020.
The data — a history of a life through spending, payments and travel — has value in terms of marketing and building new services.
Fintechs see this as an opportunity to create businesses by building platforms to provide personal financial services.
The banks will have to work harder to keep their customer base.
However, the banks are starting with a significant advantage because they already have customer data.
A recent survey by Accenture shows two-thirds (66%) of Australians are unwilling to share financial data with non-banks.
The results of the survey show the challenge that fintech companies and other digital players face in taking market share from traditional banks.
However, the research also found younger consumers more willing than older ones to share their data with third-party providers.
Andrew Stevens, the chairman of the Data Standards Body, told today’s conference: “I would hope we have 20 participants (banks and fintechs combined) on day one.”
However, he said the timetable was tight for fintechs wanting to become a trusted data recipient.
“The way in which we in the Data Standards body look at the timetable is that by February you should be in testing mode,” he told the fintech startup audience.
“You should be developing in December and therefore you will need a working draft on information security.
“The authentication and accreditation process that will be defined by the ACCC is not complete and therefore won’t be in the working draft on Friday.”
Danny Gilligan, co-founder of the Reinventure Group, says Australia should be able to do better than the UK where the launch of open banking was fundamentally flawed.
“The Australian approach is to mandate outcomes and standards and let the market decide on how best to build solutions to give that effect,” he says.
Lisa Shultz, the founder of regtech Verifer, says Australia’s open banking standards dealing with people giving consent for their data to be used could become an export opportunity.
“Why couldn’t Australia have the world’s best consent standards and license it?” she says.
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