Open banking and Data
What is Open Banking
Australia isn’t the only country that introduced open banking. In Europe, open banking has already been implemented and legislated. This government plan is to give us access to, and control over our own data. It will also allow accredited third parties to receive our banking data when we give consent for a specific purpose such as engage an accredited broker to get your home loan refinance arranged.
What data are we talking about
So what type of data will we have access to? We are talking about our banking transaction record, account balances, credit card usage and repayment history. Currently, these data sets are owned and collected by banks. Only banks get to decide who they will share this data with and who gets to see this data.
How we can use our new found power
Open banking could change our relationship with money. We will be in control when we engage with our finances. This is because the concept of open banking is that we have the complete access to our own data. We will be able to decide who we want to share it with. It can be with big banks, smaller lenders or new startup platforms.
Armed with detailed banking information about us, whoever we choose to manage our money will be able to make better decision – on credit products (our credit cards, personal loans, home loans). This is also an opportunity for more personalised finance products. We will be able to ask for more competitive interest rates if our data demonstrate that we have been a good borrower in the past.
Open banking allows new types of services and products to be developed by entrepreneurs and fintech companies. This means there will be more innovative and personalised way to do banking. It could revolutionise our finance experience, making it easier for us to switch between providers.
Open Banking time frame
These all sound very exciting, so when are we going to get there?
Open Banking regime will apply to consumers and business
- All the major banks will have to make credit and debit card, deposit and transaction account data available by July 1 2019
- Mortgages data available by February 1, 2020.
- Personal loans and all other banking data will be included from July 2020
- All remaining banks will have an extra 12 months for each phase.
Will my data be safe?
It is very important for us to know how safe our data will be safeguarded. Any parties handling the data will be subjected to the Australian Privacy Act. Also, a data standards body will be set up to facilitate and monitor the process of data sharing.
Where do we go from here?
The banking sector is the first industry that implementing this opening banking regime. Next phase will be telecommunications and energy. Following that will be data relating to health and education and broader financial services such as insurance and superannuation. Open banking is our first step to a new data economy, gradually, this will also be used by supermarkets. I can just imagine the day my supermarket knows what type of cheese I like even before I have realised it myself….. Can you?