Open Banking

The first iteration of Open Banking in Australia – a limited pilot involving the four majors – went live on 1 July 2019.

The Consumer Data Right (CDR) legislation – a critical component of Open Banking – was passed by Parliament on 1 August 2019.

When fully operational, Open Banking and the CDR will have a significant impact on all ADIs.

Open Banking and the CDR – At A Glance

Under Open Banking, customers will be given the right to instruct their existing bank to share their data with other banks and accredited third parties.

As expressed in the Australian Government-commissioned “Review into Open Banking Final Report” (dated December 2017), Open Banking is aimed at giving customers:

  • • more control over their information;
  • • more choice in their banking;
  • • more convenience in managing their money; and
  • • more confidence in the use of their bank data.

After banking, the Consumer Data Right (CDR) will be extended to the energy and telecommunications sectors – with others to follow.

For ADIs, Open Banking means that they will at least need to have a sufficiently robust application programming interface (API). More broadly, Open Banking will require ADIs to re-examine areas such as: strategies; customers; product offerings; risk-based pricing; data analytics; cyber security; and privacy policies, among others.

Gen Advisory’s view is that ADIs of all sizes should consider Open Banking as not just a compliance burden, but a strategic necessity. Given the inevitability and opportunity of Open Banking, the question ADI Boards should be asking is not whether to adopt Open Banking, but how to make the most of it.

Timeline (as at 1 July 2020)

Critical Dates for ADIs other than the 4 Majors

Critical dates for “other” banking institutions (including mutuals) and accredited data recipients:

  • • 1 July 2020: Must provide access to Product Reference Data (PRD) for credit and debit cards, deposit accounts and transaction accounts.  
  • 1 February 2021: Must provide access to consumer data on “Phase 1” and “Phase 2” products.
  • 1 July 2021: Must provide access to consumer data on “Phase 3” products.

Monthly Update: Significant developments in December 2019

20 December: The ACCC announces an update to the CDR timeline. The new timeline is as follows:

4 major banks

  • Deadline for sharing Product Reference Data (PRD) for credit cards, deposit accounts, transaction accounts, mortgage and personal loan accounts: 1 February 2020 (unchanged).
  • Deadline for sharing consumer data relating to credit and debit cards, deposit accounts and transaction accounts: Deferred from 1 February 2020 to 1 July 2020.
  • Deadline for sharing customer data relating to mortgage and personal loan accounts: Deferred from 1 July 2020 to 1 November 2020.
  • Deadline for sharing more complex data sets (including relating to joint accounts, closed accounts, direct debits and scheduled payments): 1 November 2020.

Non-major banks

  • Deadline for sharing Product Reference Data (PRD) for credit and debit cards, deposit accounts and transactions accounts: 1 July 2020 (unchanged).
  • Deadline for sharing of consumer data: The ACCC will consider in Q1 2020 whether the current deadlines of 1 February 2021 (for “Phase 1” and “Phase 2” products) and 1 July 2021 (for Phase 3 products) will still apply.

The ACCC will make the CDR Rules to reflect these changes in January 2020.

26 December: The ACCC releases a public consultation paper on: “How best to facilitate participation of third-party service providers”.

Latest State of Play (as at 6 January 2020)

  • • Three of the four majors – ANZ, CBA and WBC – have voluntarily released their “Phase 1” product data. This data is available via links on the Data61 website.
  • • Data61 continues to consult on the CDS.
  • The industry continues to await the Government’s finalisation of:
      • The Privacy Impact Assessment; and
      • The CDR Privacy Safeguard Guidelines.
  • • The following 10 entities continue to participate in testing of the CDR ecosystem in the run-up to scheduled launch date of 1 November 2020 (revised from 1 February 2020).
    1. 86400 Ltd;
    2. Frollo Australia Pty Ltd;
    3. Identitii Ltd;
    4. Procure Build;
    5. Quicka Pty Ltd;
    6. Regional Australia Bank;
    7. Verifier Australia;
    8. Wildcard Money Pty Ltd;
    9. Intuit Australia Pty Ltd;
    10. Money Tree Financial Technology Pty Ltd.

Our Research

A sample of Gen Advisory’s research to date on Open Banking is presented below.

Gen Advisory’s view is that Open Banking will ultimately have a game-changing impact on the Australian banking sector.  We will continue to monitor developments in this space very closely.

For a glossary of terms and abbreviations relating to “Open Banking”, please click here.
For a list of applicable references, please click here.

How Gen Advisory can help ADIs on Open Banking

Drawing from our toolkit of services, ways in which Gen Advisory can assist Australian ADIs on Open Banking include the following:

  • • Ascertaining the ADI’s current understanding of, and preparedness for, Open Banking.
  • • Delivering bespoke training on Open Banking.
  • • Delivering bespoke research on a specific Open Banking-related area of interest.
  • • Designing an ADI-specific technical assistance programme on Open Banking.
  • • Managing and executing, on an ADI’s behalf, a project on Open Banking.
  • • Drawing from Gen Advisory’s network of FinTech Australia members, partnering with suitable FinTech providers if needed.
  • • Conducting due diligence on prospective FinTech partners.

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