Banks could implement an open banking solution in three months
Australia’s banks could implement a solution in three months that meets ACCC’s Open Banking pilot regime protocols and ASIC’s new responsible lending principles – because the most advanced solution available already exists, according to industry disruptor Michael Fredericks.
“Instead of turning themselves in knots, they could implement a world-leading platform developed in Australia that uses machine learning and predictive algorithms on all of a customer’s aggregated transactional data to provide transparency into their spending and budget habits. In addition, it provides customised actionable insights into the impact of their purchase and lifestyle choices on current and future pay cycles, empowering customers to more efficiently manage their cashflow, and financial institutions to lend more responsibly.”
“Many banks allege that this just isn’t feasible yet as it would take several hours to check a few months’ transactional data. It is possible – we’ve already created it. It provides results in close to real time and provides future predictions and suggests activity for customers as they use it.
“We are already engaging with two lenders looking to implement it who have been receiving great test results. We are offering it to both traditional banking and Fintechs as a software as service solution.”
Michael Fredericks, founder of recently launched FU (short for ‘Future You’, focused on millennial customers) and Onthemonee (focused on families and small business) has developed the platform with the assistance of all three Australian data aggregation partners, Basiq, Look Who’s Charging and Yodlee. It meets all Open Banking regime protocols, including a secure interface for encrypted data capture and exchange to industry-best practices, including banking-grade end-to-end data encryption, multi-factor authentication, privacy and other secure environment practices.
Fredericks, who was behind the Onthehouse data analytics company that disrupted the property sector by providing transparent data information to consumers which until then had only been available to real estate agents, before being bought out by CoreLogic RP Data, can see the banking sector struggling against inevitable progress the same way the real estate industry did.
“The elephant in the room is that while we’ve just had a Royal Commission into the sector, banks just don’t want customers to access their transactional data from all their accounts in one place. Open Banking disrupts the old lending models because they have enjoyed somewhat monopoly rights over their customer data until now.
Open Banking is about providing consumers with access to their own transactional data across all banks so they can make better decisions – particularly around responsible spending.
“Banks need to think differently. This cash flow management and budgeting capability benefits their customers, but also them. It allows them to use the platform to verify borrower expenditure and better understand if their customers can afford credit or contractual payment commitments. It also assists Australian lending companies to lend more responsibly by better understanding their customers’ ability to service any debt. Everyone actually wins.”
“Rather than continue to bury their heads in the sand, if the banks embrace the available solutions, they could have this solution in place by the time the dust settles on the regulators’ findings.“
