'No better time for open banking to launch: Senator Jane Hume' Cliona O'Dowd, The Australian
The rollout of the new open banking regime, which officially launched on July 1, couldn’t have come at a better time as Australians look to cut costs to weather the nation’s first recession in three decades, according to Assistant Financial Services Minister Jane Hume.
The Consumer Data Right Act came into law at the start of the month, with the first part — open banking — enabling customers of the big four banks to share data on deposits, transaction accounts, credit cards and debit cards with accredited third-party providers.
The ability to share data should help customers get better deals and cut the cost of financial services, Senator Hume said.
“It will encourage the big four banks to create more competitive offerings, the smaller banks to get access to consumers that they may never have had before, and fintechs to enter the market with an innovative offering, which is really exciting,” she said.
“Open banking couldn’t have come at a better time. As people tend to their personal balance sheets and say ‘how am I going to find a way through this crisis?’ and ‘are the products that I’ve got right for me?’, open banking will allow them to find a better deal and to use their own data to find that deal.
“It will encourage financial services organisations to innovate and tailor products specifically to their clients. And it will make switching between those products more seamless. So it actually comes at a great time and overall, of course, it will reduce the cost of financial services and of everyday banking,” she said.
The new regime will bring a new level of competition to the sector, but would likely be a “slow burn”, as consumers learned the system, she said.
“But once it starts taking off, it will dramatically change the landscape of how we go about engaging without financial services. In a decade’s time, we’ll look back and think how old fashioned (the old system) really is.”
As the COVID-19 crisis forced the nation into economic shutdown earlier this year, the ACCC pushed out the deadline for non-major lenders to be ready for the new regime, with customers of those lenders now expected to be able to share their data securely from October 1, as opposed to the original July 1 target.
Data sharing on mortgages and personal loans from the big banks, meanwhile, is still scheduled to be rolled out on November 1, with non-major lenders to follow next year.
During the intervening period, non-major banks and fintechs will seek to become accredited by the ACCC to participate in the system.
While dozens have already applied to the ACCC for accreditation, just two have been given the go-ahead: Regional Australia Bank and Sydney-based fintech Frollo.
“This will unlock a lot of potential for innovation that has been lying dormant and waiting for it to go live. I know that the fintech industry are really excited about this,” Senator Hume said.
“The big four banks have also been really good about getting on board with this and making sure that their data is ready for sharing, mainly because they can see the benefits in the new competitive environment.”
The system was set up to ensure consent to access data was genuine and unambiguous, and consumers could revoke that consent at any time, she added.
Cliona O'Dowd, The Australian. Click here to read original arictle.