Open data lets fintechs compete
The fintech community has welcomed the Turnbull government’s commitment to implement an open banking regime, saying it will enable local companies to compete more vigorously against the global “digital juggernauts”.
FinTech Australia chair Stuart Stoyan said news that the government would legislate to enable customers to access their own banking data would be key to providing customers with greater choice, an improved understanding of their financial position and more control over their financial future.
“It is also vital to supporting greater fintech innovation, which creates increased competition, greater choice, more efficient delivery and a lower price for financial services for consumers,” Mr Stoyan, also the founder of the marketplace lender MoneyPlace, said.
“Without access to the financial data necessary to build, test and deploy innovative solutions in their local market, Australian companies stand little chance of being able to compete on an increasingly global stage against digital juggernauts.
“The net outcome of this is that increasing amounts of our tax revenue and best-skilled labour will go offshore.” Scott Morrison yesterday released a report by King & Wood Mallesons partner Scott Farrell that will guide the government’s approach to implementation of an open banking system.
It will be introduced as part of the consumer data right — a more general right to data being created across the economy following a recommendation by the Productivity Commission’s data availability and use inquiry.
Last November, the government said the consumer data right would be established sector-bysector, beginning with banking, energy and telecommunications.
The Farrell report makes 50 recommendations on the regulatory framework to support open banking, including what data should be shared and with whom; the safeguards needed to encourage open banking; how data should be transferred; and how open banking should be rolled out.
The Treasurer said in an address to the Citibank A50 econ- omic forum in Sydney yesterday that open banking would completely transform the way consumers interacted with the banking system.
By granting third-party access to their data, they would be offered more competitive deals by rival providers, enhanced services and products tailored to their needs.
“Banks won’t be able to afford to take customers for granted and lock other competitors out,” Mr Morrison said.
“Innovate or watch your customer walk out the door, armed with their data.
“The disruption to the majorbank stronghold on data will make the process of switching between banks less painful and help them overcome the ‘hassle factor’ that sees customers stay with their current bank even there are better deals on offer.
“Importantly, open banking will lift the lid on competition and encourage a new wave of fintech innovation and product development.”
Mr Morrison foreshadowed a future where mobile apps would enable customers to not only manage their finances, but get realtime budget and investment advice from experts over live chat.
There would also be real-time product comparison services.
The Farrell report said data enhanced by analysis should not be included in open banking.