Open banking regime to boost advice

Australia’s open banking regime will fundamentally change the way financial advisers interact with consumers but several hurdles must be cleared before any true potential is realised.

The expected multi-billion dollar implementation of open banking will give consumers greater access to and control over their banking data – allowing them to share it with wealth managers for new or better services.

However, giving consumers more control does not automatically translate to immediate benefit.

In its submission to Treasury’s review of open banking in Australia, Fintech Australia described the initiative as vital but notes several shortcomings to customer data collection and reuse. It said reports from its 170 members indicated between 10 to 50% of potential customers baulking at handing over their banking passcode. There have also been concerns that banks are advising customers against giving their passcodes as a means of stifling competition, the association said.

Paul Chapman, chief executive of personal finance app Moneytree says there is always some risk when you hand over a bank password. However, most bank passwords can’t move funds anyway “because we don’t have access to one-time password tokens or secondary factors of authentication.”

ANZ’s submission notes the potential for IT system compromises where personal bank data could expose consumers to identify theft and privacy concerns. The bank goes on to say research in connection with the UK open banking standard “indicates that 77% of consumers believe that third parties accessing their financial data should be regulated.”

Financial technology expert and principal financial adviser at AP Financial Solutions, Adrian Patty, says open banking will improve innovation and the delivery of new technologies, and in turn, allow advisers to deliver greater value.

Already partnering with fintech myprosperity, Patty has seen a marked difference in the way clients’ expenses are analysed and reconciled, leaving them more engaged with the advice process and a better understanding of their financial situation.

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Source: Open banking regime to boost advice | Financial Standard