Banks cite privacy in caution over open data review
AUSTRALIA’S banks have cautiously welcomed the formalisation of a review to examine how to implement an open banking regime that could dramatically increase competition and reduce costs for customers.
Treasurer Scott Morrison has appointed Scott Farrell, a partner at law firm King & Wood Mallesons, to lead a review that will report to government by the end of the year.
Big banks have generally accepted the new regime, announced in May and set to come into force in 2018, will bring benefits for customers but many have expressed reservations about security.
Australian Bankers’ Association policy director Tony Pearson yesterday repeated those concerns. “We believe that, designed properly, expanding data access will give customers valuable information to find better deals with their financial products and services,” Mr Pearson said in a statement.
“But it will take a shared effort between banks, governments and fintechs to address issues like ensuring customer privacy is protected, their data is secure and knowing what to do when something goes wrong.”
Open data means customers will be able to request indepth information about their financial histories and use it to find products and services.
This could see fintechs and automated services taking market share away from traditional lenders.
The chief executives of the big four banks told MPs this year they welcomed competition but their call for security was echoed by Mr Pearson yesterday.
“Banks welcome the move to an open banking regime provided that customer security and privacy needs are paramount,” he said. “This inquiry is a crucial step to identify and resolve the legal and technical challenges in open banking.”