“Open banking regime will empower customers, enhance competition and drive Australian innovation”
FinTech Australia today welcomed news that the Australian Government will legislate to empower customers by requiring banks to allow these customers to access their own data. The Government has published a report on Open Banking, an approach they intend on applying across numerous industry sectors with banking being the first to sector to implement under the label “Consumer Data Right” or CDR. The proposed policy is accepting comments now following an earlier consultation.
“An open banking regime is key to giving consumers more choice of financial services providers, a greater understanding of their financial standing and overall more control over their financial future,” said FinTech Australia chair Stuart Stoyan. “It is also vital to supporting greater fintech innovation – which creates increased competition, greater choice, more efficient delivery and lower price of financial services for consumers.”
FinTech Australia founding chair and board member Simon Cant said FinTech Australia has been a consistent advocate for policy reform to drive the implementation of an open banking (also known as open financial data) framework in Australia.
“From our very first policy reform recommendation paper to Federal Treasury in February 2016, through our three submissions to the Productivity Commission’s inquiry into Data Availability and Use and to the current Australian Treasury review, we have continuously advocated that the government mandate the development and implementation of a standardised open banking model,” Cant said.
Cant added that FinTech Australia has advocated a model that included an “accreditation framework” to ensure data security. He said he was pleased to see the government to incorporate this recommendation. Cant believes a model that achieves openness and confidence is an opportunity to create an Open Banking ecosystem that leads the world which thus leads to growth in Fintech.
Stoyan said a regulated open data regime would allow Fintech firms, and Australia’s financial services industry, to compete against global tech players.
“Without access to the financial data necessary to build, test and deploy innovative fintech solutions in their local market, Australian companies stand little chance of being able to compete on an increasingly global stage against these digital juggernauts. The net outcome of this is that increasing amounts of our tax revenue, and best skilled labour will go offshore.”
FinTech Australia said it would be closely reviewing the report published earlier today. The group intends on submitting a response per the request of the government.
The draft legislation is said to require the major banks to supply 50% of their comprehensive credit reporting data to credit reporting bodies by 1 July 2018, increasing to 100% a year later. These changes would “level the playing field in favour of customers,” by ensuring their positive credit history was front and centre when lending decisions were made.
Several members of the Austtralian Fintech community have voluntary moved to incorporate comprehensive credit reporting. These include Ratesetter, MoneyPlace and SocietyOne.
“Until now, a number of Australia’s big banks and lenders have not been sharing the positive data which should allow customers to get better credit,” Stoyan said. “The release of exposure draft legislation today is an important step to help consumers get lower interest rates and better access to credit. This will especially help borrowers with a good credit history who make their repayments on time, rewarding their good behaviour with fairer rates.”