Open banking is the basis on which consumers will be able to securely and easily share their financial data with trusted parties such as banks, financial technology firms or potentially tech giants like Facebook.Treasurer Scott Morrison last year ordered a review into open banking. The final...
Open banking is the basis on which consumers will be able to securely and easily share their financial data with trusted parties such as banks, financial technology firms or potentially tech giants like Facebook.
Treasurer Scott Morrison last year ordered a review into open banking. The final report published last month provided 50 recommendations on implementing open banking in Australia.
Australia is following the lead of the United Kingdom, Europe and Japan in introducing open banking, with Japan set to open up its banks in April.
Opportunity for data portability
Moneytree was one of the start-ups that made a submission to the government’s review. Having had a front-row seat to its introduction in Japan, Chapman is optimistic about the benefits of open banking for consumers in Australia.
Open banking is clearly of benefit to Chapman’s business, with the Moneytree app built using Salesforce’s Heroku linking directly to users’ bank and credit card accounts, superannuation funds and loyalty programs to display real-time financial information to users.
“We think everyone will have a need for a data portability platform as everyone has a very fragmented financial future ahead of them,” he says.
Chapman acknowledges open banking has its critics but says it will put an end to screen scraping which is currently used to collect data.
“In Australia, banks have said they are not so happy about it,” he says. “Some banks have indicated that people who are doing this are doing something that is dangerous and it may breach their terms of service. I think there is a lot of fear, uncertainty and doubt around whether data aggregation is good or bad. What we say to that is data aggregation has been around for 20 years in finance. We are not aware of a single proven case of data loss.”
Another start-up set to benefit from open banking is Basiq, which is partly owned by Westpac and the National Australia Bank. Basiq already provides fintechs with secure access to some of the data on consumers held by banks. Its founder, Damir Cuca, says open banking could make life easier for consumers by enabling services like on-the-spot approval for customers who want a loan based on shared transaction history.
Opening the door for disruptors
Jonathan Lavender, KPMG global head of enterprise, is currently visiting Australia from Israel, which he says is one of the world’s leaders in open banking. Lavender says open banking is opening the door for disruptors and start-ups.
“The banks until a few years ago thought they were going to solve all their problems by themselves and didn’t want to interact with the new disruptors in the market,” he says. “What we have seen in the last few years is their understanding that their ability to solve their problems themselves is either too expensive or not quick enough to the market so they are aligning and joint venturing and really opening up their systems.”
The government is seeking further detailed comments on the recommendations in its report on open banking by March 23 before making final decisions on implementation.
Cara is Fairfax media’s small business editor based in Melbourne
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