Open Banking is finally here: How will it impact your money choices?

The shift towards an open banking system which puts more power in the hands of Australian customers is well and truly underway. The launch of Consumer Data Right (CDR) on July 1, 2020 is the most significant milestone to date in this arena.

Customers of Australia’s four major banks, ANZ, Commonwealth Bank, NAB and Westpac, can now opt to share their own banking product data with third parties such as fintechs and other banks – making it easier than ever to switch to a better deal.

But why is this important? What’s involved? And when will this option become available to customers who don’t bank with the big four? Read on for more.

What is Open Banking and Consumer Data Right (CDR)?

Open Banking: A move towards greater transparency and open data in the banking sector. One which gives consumers greater freedom over their data and creates more competition by allowing third parties to more easily participate in the space. 

Consumer Data Right (CDR): An opt-in service overseen by the Australian Competition and Consumer Commission (ACCC) which allows consumers to share their data more easily with financial providers. Will also apply to energy and telecommunications in the coming years.

Open Banking timeline

• May 2017: Federal Government announces support of an open banking system in Australia and commissions a review on the subject in the following months.
• May 2018: Government agrees with review recommendations including the creation of a Consumer Data Right (CDR).
• August 2019: Parliament legislates changes to allow for open banking.
• July 2020: CDR goes live for customers of big four banks and accredited providers. Sharing limited to credit cards, debit cards and deposit accounts.
• November 2020: Big four customers can begin to access and share home loans and personal loans data.
• July 2021: All other non-major banks, building societies and credit unions required to allow customers to share product, account and transaction data for all banking products.

As you’d expect from the name, Open Banking is all about providing a more open system which shifts some of the power away from banks and other financial institutions back into consumer hands – especially when it comes to data.

Under the present system, consumers don’t have ready access to their own data, making it a cumbersome process to collect and share it with other financial providers if, say, you were looking to make the switch to another bank.

It’s not just about making things smoother though, it’s also about providing more choice. Banks have often been reluctant to allow consumers to share their own data with third party fintechs such as investing and money management apps.

To read more, please click on the link below…

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