Industries leaders express their views on Australia’s open banking regime
Australia’s open banking regime commenced yesterday, 1 July, 2019. Here’s what some of the industry leaders had to say about the launch:
Luke Bunbury, Deputy CEO, Volt Bank:
The launch of open banking in Australia is going to force the major banks to relinquish control of customers’ banking data, to customers themselves. Starting with product data on 1 July, and extending to customer data by 1 February 2020, open banking will break down the barriers consumers have faced in finding and switching to banks which offer them the best deals.
This means the incumbent banks will have to innovate to compete, as there will be a long line of fintechs and neobanks like Volt wanting to harness this data to offer customers a superior banking experience. Customers will be the masters of their data, and third parties will have to earn it by being innovative and trustworthy.
As a new, digital bank, Volt is an open banking native and is building its offering around improving customers lives, rather than selling products.
Soon, Volt and other innovative banks will be able to help Australians find and secure better deals on a range of banking and even non-banking services, like utilities and travel. By enabling data to be shareable across financial institutions, it will be also possible for customers to manage multiple bank accounts from one mobile app, regardless of whether the accounts are held with rival banks.
There is work to be done on educating and convincing consumers of the benefits of open banking, and reassuring them that the security and privacy of their data will not be compromised. However, Volt believes customers have the right to own their data, and we are confident these innovations will improve Australians’ overall banking experience.
David Link, CEO, Verrency:
Open Banking is – eventually – going to drive greater innovation in our banking system as Australians’ access to their financial data is democratised and rendered more transparent. While 1 July 2019 will not drastically change the way Australians bank – as only product, rather than customer, data will be available until 1 February 2020, this is a huge step towards that much more transformative change.
From February 2020, Australian bank customers will be empowered to request that their financial data is shared with approved third parties. This is a tremendous opportunity for consumers to achieve better financial outcomes and very importantly, an incredible opportunity for banks to innovate.
By being enabled to receive customer data from third party institutions, banks will be able to deliver a more personalised consumer offering as well as different value-added services, and become a more trusted banking partner to their customers. The effective use of data and access to new value-added services will slowly become a major decision-driver for consumers when it comes to choosing or changing who ‘owns their relationship’. Banks which don’t take this extremely seriously are going to slowly struggle to remain competitive. On the other hand, those which take steps to become more agile – especially in their ability to deliver value around the consumer relationship — are going to thrive in the post-open banking landscape.
One trend to watch is how global consumer platforms such as Facebook, Apple, Google, Amazon, PayPal and Samsung, who are already a factor in the local payments landscape through their digital wallets, adapt in an open banking environment. Open banking will ultimately allow these consumer platforms to better integrate their ecosystem of services into the rest of their banking experience, such as loans and mortgages, giving them a new advantage over the local banks. The potential outcome of this is that the large consumer platforms own the consumer relationship and that banks who don’t move equally as fast to meet the changing desires of their customers then become commoditised and lose a substantial proportion of their revenue. The banks that will win in the long run – big or small, established player or neobank – will be those that deliver services and products of value to their customers. And the battlefront for those customers will be around the moment of payment.
Santosh Devaraj, CEO, Secure Logic:
Secure Logic strongly supports open banking in Australia. Open banking is about giving bank customers more control over their own data and we think that the initiative will foster a secure and rich ecosystem of fintech innovation. This is positive for consumers, because it will increase competition, and help customers receive better deals on their banking products.
We know from our close work with governments and fintechs that consumer confidence and trust in security systems are essential to the uptake of a technology or platform. Understandably, there is concern among the public about what this means for the security and privacy of their banking data, and government and industry are going to need to take consumers on an educational journey about how their data will remain secure. This will be particularly important as the government legislates the Consumer Data Right in the coming months, and the prospect of increased data flow around multiple sectors of the economy becomes a reality.
The only companies which will initially be approved to receive this data are ADIs and other financial institutions which are already subject to highly stringent legislation about their security infrastructure, so there is a high degree of assurance. This needs to be communicated to Australians so they aren’t scared of their data, and take control of it to improve their lives.
Open banking will generate a vibrant economy and Secure Logic looks forward to working with both governments and the established and companies in the field to leverage Secure Logic’s expertise to help support and mature the industry.
