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

Critical Dates for ADIs other than the 4 Majors

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

  • • 1 July 2020: Need to provide access to product, account and transaction data for credit and debit cards, deposit accounts, and transaction accounts.  
  • 1 July 2020: Need to provide access to product, account and transaction data for mortgage products.
  • 1 February 2021: Need to provide access to product, account and transaction data for personal loan and other accounts.

Derived from: The Treasury website. Retrieved July 2019.

Monthly Update: Significant developments in September 2019

  • • 1 September: The ACCC released its “lock-down version” of the CDR Rules. This is a significant milestone as it allows ADIs to continue with development. 
  • • 11 September: The Australian Senate creates a select committee on FinTech and RegTech, chaired by Liberal Senator Andrew Bragg. in CDR testing. These selected participants will be first in the CDR eco-system from February 2020.
  • • 25 September: The ACCC announces 10 successful applicants (out of 40 expressions of interest received) for CDR testing. These 10 applicants will now participate in testing of the CDR ecosystem in the run-up to launch in February 2020. The 10 successful applicants are:
    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.
  • • 25 September 2019: The ACCC also releases its CDR accreditation guidelines.
  • 30 September 2019: Data61 releases for public comment its latest version (“Version 1.0.0”) of the Consumer Data Standards.

Latest State of Play (as at 1 October 2019)

  • • 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 Privacy Impact Statement for the CDR is also still being finalised.

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.

“Contributing towards a resilient and sustainable Australian banking sector."


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