Banking royal commission interim report: Banks to tap each other's account data

There’s a clear takeaway for the fintech scene from the banking royal commission’s interim report: the major banks will have to get much more sophisticated accessing and analysing spending data generated by customers.

In the wake of Commissioner Kenneth Hayne’s blockbuster report, data policy inside the banks is no longer going to be viewed solely through the prism of customer experience but also of regulatory compliance.

The ability to tap reliable data sources held outside the bank, and making sense of those numbers, will become a mission critical function for all banks. This means spending on data analytics technology is set to rise, and banks are likely to accelerate engagement with fintech and regtech start-ups developing new ways to get insights on spending patterns.

The royal commission chastised banks’ general slackness at determining borrowers’ real spending – something the consumer credit laws require them to do, in order to ensure a loan is suitable. Banks have traditionally used the so-called ‘household expenditure measure’ (HEM) as a default measure of spending but Commissioner Hayne said this “does not constitute any verification of a borrower’s expenditure”. Verification also “calls for more than taking the consumer at his or her word”, he said.

To read more about the banking royal commission report, please click on the link below…

Source: Banking royal commission interim report: Banks to tap each other’s account data | afr.com