Consumer Credit
Open banking in Australia So, what’s the big deal about the implementation of open banking in Australia… and how does it work? In this article I’ll explain how open banking will change our financial landscape – and what credit risk managers should be thinking about now. By Jarrid Ohanessian*
Jarrid Ohanessian
I’m often asked about the implementation of open banking in Australia – and how it all works. Open Banking is the first instance of what is called the Consumer Data Right (CDR). In time we will also have Energy and Telecommunications as CDRs – the idea is that these data sets are the consumer’s data and they can use it to their advantage to benefit themselves through, for example, cheaper services. Put simply, open banking is a significant shift in approach which will give consumers control over what they can do with their own data. It takes us beyond existing financial technologies and into a fully regulated environment where consumers have much more choice over a wide range of financial services and products. The rules that govern open banking have been put in place by the ACCC – and are currently being finetuned. The process of implementing open banking is well underway, and the ACCC has handed it over to The Treasury. Importantly, banking is the first industry where CDR will enable consumers to decide who can view and utilise their data, for how long, and for what purpose – and they can revoke this access at any time. This puts consumers firmly in control and creates a standardised customer experience, not only making it easy for
consumers to use, but inspiring trust in open banking itself. It’s a significant shift from the status quo today, where the banks have control. With the Consumer Data Right (CDR) now live, consumers can share their banking data with third party institutions such as banks, credit unions, fintechs, online lenders and money management apps. It’s a great way for them to share their data, giving them more control and encouraging widespread competition. There’s a roadmap in place for full implementation, with all banks slated to be sharing their data into the ecosystem by February 2022. All this data is great for consumers, but it is also great for providers of financial products because they can make cheaper, quicker, better decisions and create products tailored to the individual. This data will level the playing field between large banks with the expertise and scale to do very smart things and the fintechs with the agility and smarts … to do very smart things. Everyone will benefit from the resultant innovation. With a direct channel of access to your data, financial service providers will be able to supply faster, highly tailored advice. You’ll be able to safely link your data to more applications to receive advice, automate processes and ultimately make better decisions in a less timeconsuming way. ➤
April 2021 • CREDIT MANAGEMENT IN AUSTRALIA 35
