Published on the 20/02/2018 | Written by Jonathan Cotton
Consumer financial data rights is the new contested space in tech as the government pries open the big four banks’ data vaults...
A comprehensive government report – Review into Open Banking: Giving customers choice, convenience and confidence – has set out the rules for the introduction of new open banking policies in Australia.
Long story short, Australian consumers now ‘own’ their banking, energy, phone, and internet transaction data and will soon have access to it.
The latest open banking report – commissioned by Treasury and conducted by King & Wood Mallesons partner Scott Farrell – makes 50 recommendations on the regulatory framework, the type of banking data in scope, privacy and security safeguards for banking customers, the data transfer mechanism and implementation issues. It gives Australia’s big four banks 12 months to develop systems to help transfer customer data to approved third-party APIs. (Read the issues paper here).
“From the commencement date, the four major Australian banks should be obliged to comply with a direction to share data under Open Banking,” reads the report.
“The remaining Authorised Deposit-taking Institutions (ADIs) should be obliged to share data from 12 months after the commencement date, unless the Australian Competition and Consumer Commission (ACCC) determines that a later date is more appropriate.”
It’s expected that the big four – the Commonwealth Bank of Australia, the National Australia Bank, ANZ and Westpac, which collectively hold about 95 percent market share of the entire Australian finance industry – will request extensions to the 12 month timeframe.
Governments globally are looking at open banking with increased interest as a way to allow greater choice for customers, giving them easier access to – and a degree of control over – their banking data. As customers can better assess time, cost and convenience spend – or so the logic goes – they’ll be able to make better decisions when identifying and selecting financial products and services. That power then drives competition and banking services to improve.
Open access to data also opens the way for innovation and for outside service providers to increase, improve and better tailor their offerings and for alternative business models and products to emerge.
A number of recent reviews and inquiries have recommended expanding customers’ access to data – one in 2014, another in 2015 and last year’s government-commissioned Productivity Commission (PC) Inquiry into Data Availability and Use. The PC’s Data Report recommended a new right for consumers across the economy to direct data holders to transfer the consumer’s data in a machine-readable form to the consumer or their nominated third party.
In 2016 a Report of the House of Representatives Standing Committee on Economics’ Review of the Four Major Banks (AKA the Coleman Report) concluded that there is a strong case for increasing consumers’ access to their banking data and to banking product data. That Committee recommended that banks be required to provide open access to customer and small business data by July 2018.
“Granting third-party access to a customer’s data will allow rival providers to offer competitive deals, products that are tailored to individual needs, and enhanced services that simplify the choices customers face when accessing banking services,” said Morrison in a statement earlier this month.
“Granting third-party access to data will allow rivals to offer competitive deals and enhanced services.”
“It should simplify the process of switching between banks and help to overcome the ‘hassle factor’ that sees customers stay with their current bank even in the presence of more competitive deals elsewhere.”
Submissions to the consultation are open until 23 March 2018 via email@example.com