In a previous blog, we spoke about the Australian government’s proposal for data sharing, beginning in the banking sector with Open Banking. They published a review, asking for comments on how an open banking system would work in Australia.
The Australian Banking Association published their submission late last year, supporting the implementation of open banking. They are asking for specific standards to be met, to ensure the security of consumer data.
They believe the success of open data relies on placing customer interests at the centre of open banking’s implementation. Their submission suggested that it should fuel competition in the banking industry, benefiting customers, with businesses fighting to provide the best customer experience. This also allows customers to choose the most appropriate products and services to meet their circumstances.
Scope of an Open Banking system
They believe an open banking system should use customer data to enhance competition and productivity, and use general product data to help customers make product comparisons. It should put customer interests first to improve the customer experience.
The system should address privacy, security and liability issues before companies provide third parties with access to customer data. Customer data should only be shared once, to meet security standards. Safe data sharing should give customers control over the sharing and usage of their data. It should always be a reciprocal sharing process, with both customer and product data shared.
According to the ABA, an Open Banking system should be expanded economy-wide to other industries in Australia. They suggested that an Industry Implementation Working Group (IIWG), drawing on the successful elements of the UK’s Open Banking Working Group and Australia’s NPP, should including a steering group, specialist subgroups and a body of advisory groups. This would ensure that an open banking system would best suit the Australian banking industry and would match consumer interests.
The risks and costs
There should also be minimum standards on privacy, liability and security, in order to protect consumers. The ABA suggests that an Open Banking system should prioritise security, such as getting customer consent. This addresses concerns about security, with businesses gaining access to consumers’ personal data.
The government should also provide assistance to educate Australians about how data sharing will work, a requirement that was recommended in the Open Banking Review. They should also enable Australians to access publicly-held personal data, which would complement the Open Banking system. This would help consumers to better understand Open Banking, and would address misunderstandings about what the data sharing system means.
The ABA believes there also should be accreditation monitored by an economy-wide regulator to address appeals and complaints about data sharing. In their submission, the ABA said they intend to be involved in the Open Banking system in order to develop more innovative and customer-first products and services.
It could impact face-to-face financial advice by allowing consumers to share their own financial data with their adviser, and allowing advisers to access product data. This helps consumers, with the help of their adviser, to make the best decision about their finances.
Platforms and fund managers, likewise, could benefit from open data sharing in Australia. Those with the most access to data have a better understanding of the industry and of consumers, helping them to experience more success.
You can read the ABA’s full submission here.