Data sharing is on the way

You may not have heard of open banking – according to a survey of 2000 Aussies earlier this year, 83% were unaware of it or unsure what it involved. But the new regime, which could reshape the financial services landscape, will be on Aussie shores from July next year so it is worth understanding what it will mean.

“Open banking will require banks to share customers’ details, right down to transactions, if the customer consents to have their data shared,” explains Azhar Khan, research analyst at RFi Group. “This data will only be shared with approved third parties who will have to take precautions to protect the customer’s information.”

Open banking is the first phase of the federal government’s Consumer Data Right and a similar scheme will follow for energy and telecommunications. In theory, it is meant to increase transparency and make it easier for customers to find better deals, as competition will be improved, and it will also make it easier to switch providers.

It will be phased in product by product, starting with deposit, credit and transaction accounts in July 2019. Mortgage products will be next (February 2020) and then personal loans (July 2020).

About two-thirds of Aussies are concerned for security and privacy reasons but it will be an opt-in measure and so those who are not willing to share their data will be largely unaffected, says Khan.

“Open banking has already been introduced in the UK, and so the Australian bodies involved in its implementation will have systems which they can emulate and look to,” he says.