Sophie Elsworth says Australian banking customers could soon be given the green light to share their personal financial information and it could see them scoring cheaper deals.
By Sophie Elsworth*
Banking customers could soon be given the green light to share their personal financial data and score themselves cheaper deals.
Dubbed “open banking”, the system will allow a customer to “opt-in” and have their transactional data shared with a recipient free of charge.
Concerns remain around the implementation of the data-sharing system, prompting Federal Treasurer, Scott Morrison to order an independent review into open banking in 2017.
The Federal Government was handed back 50 recommendations earlier this year to consider before the new system comes into force.
This includes a closer look at privacy and security safeguards for customers, how their data is transferred and determining how open banking should be rolled out.
The Australian Payments Network’s CEO, Dr Leila Fourie believes the system will provide “greater choice for customers” by allowing their personal data to be safely shared within the financial services sector.
“Open banking aims to create greater choice for customers by giving them a means of safely sharing their data as part of a broader consumer data right,’’ she said.
“With greater access to a wide range of data, third parties may well be able to develop competitive offerings that will deliver increased benefits to customers in the form of deals or improved convenience in managing their money.”
Open banking already exists in the United Kingdom, while Europe and Japan will roll out it this month.
But with no set date announced in Australia, customers may be torn on whether they want to take part once it is given the all clear to proceed.
Using an application programming interface (API), this will allow data held by a customer’s bank to be shared with another company providing financial services or even a rival bank.
But for institutions to receive data the third party must undergo security evaluation and accreditation to ensure there are no privacy or security breaches.
The Australian Banking Association’s CEO, Anna Bligh said her biggest concern around open banking was that customers understood what they were consenting to and what their data would be used for.
Financial services’ software lab Rare Birds’ co-founder Cameron Upshall said for decades banks had “held a key” to a customer’s data, and open banking “is about giving the key back to the consumer”.
“With open banking, the promise is you can pick up your information and move that across to a different provider who could offer you better products, better service and better customer experience,’’ he said.
“You are giving the power back to the consumer to get a better deal.”
There’s no denying open banking remains a threat to traditional lenders, because it will allow consumers to more freely share their information and make switching institutions easier.
It will also encourage new entrants in the market, which will help drive competition and likely in turn deliver cheap deals for consumers.
* Sophie Elsworth is a personal finance writer for Newscorp in Melbourne. She tweets at @sophieelsworth.
This article first appeared at www.news.com.au.
