Australia’s open banking regime, which is based on Consumer Data Right (CDR) legislation, officially launched in July 2019. It aims to drive innovation and competition, as well as give customers more control over their data and easier access to products and services that best fit their organisational and individual circumstances.
Unlike in some countries, the CDR legislation is multi-industry, government-led, and being introduced in phases. Banking is the first industry to be captured by the legislation, which was introduced in November 2017. In terms of broader roll-out, the energy sector is next, then telecommunications. It is therefore an economy-wide initiative to use data, when consumer or business consent is granted, to drive better outcomes.
Implemented in phases
Open banking’s first milestone in 2019 saw the major banks share eligible product data, such as rates, fees, and terms and conditions through publicly available application programming interfaces (APIs). The next major milestone enabled consumers to share their banking data with accredited data recipients (ADRs). This can only occur with the customer’s explicit consent.
From July 2020, individual account holders and sole trader customers of major banks could share data relating to their retail banking products, such as transaction and saving accounts, term deposits and debit/credit cards. This was then extended to include home loans, personal loans and offset accounts, and also made available to joint account customers.
The final group of products was introduced in February 2021. It includes business lending, asset finance, trust accounts, overdrafts, lines of credit and foreign currency accounts. From November 2021, the major banks will enable data sharing for non-individuals, business partnerships and secondary users. At Commonwealth Bank, this means enabling data sharing on our CommBiz online banking platform. The non-major bank consumer data roll-out commenced on 1 July 2021 and will continue throughout 2022.
What success looks like
As in the UK, consumer adoption will take time. There are currently a number of ADRs in the ecosystem, and early adopters are already sharing data within the regime. Katherine Sleeth, Executive Manager, Open Data, at Commonwealth Bank, says the introduction of more ADRs and the further roll-out across the banking sector will help to drive uptake. “We will see adoption pick up over time as more offerings come to market and awareness builds among consumers.”
For open banking to realise its potential, it is critical that it is safe, sound, secure and trusted. Only then will consumers and businesses trust it and use it get to get enhanced value from sharing their data. Success in the long-term will mean no data leaks, customer privacy not being put at risk, robust accreditation standards for participating third parties, and an exemplary security environment. Katherine says open banking provides a safe and secure way for customers to share their Commonwealth Bank data with other providers to get more value from their data. Commonwealth Bank was the first major bank to become an ADR.
Greater richness from data
Commonwealth Bank has a first offering to allow our customers to be able to see their eligible products held with a major bank in the CommBank app. This allows customers to see a single view of their finances in the one place. Even more exciting is “the future roadmap where we will introduce additional features and insights to enhance customers’ financial wellbeing by leveraging CDR data”, Katherine says.
For example, ADRs can more readily access customers’ income and expense data to facilitate loan decisions instead of customers needing to provide payslips or PDFs of their recent bank statements.
Vast array of possibilities
Commonwealth Bank strategic partnerships and its innovation arm, x15ventures, add to the possibilities for creating value-add products and services for customers. x15ventures is building the next generation of solutions for Commonwealth Bank’s 11+ million customers by unlocking new value from its assets through partnerships with the tech and innovation community. The combination of open banking, x15ventures and strategic partners means “the sky is the limit”, says Katherine.
Value propositions for business customers could include enabling money and treasury management features that utilise data from their banks and accounting software providers to support a simple, consolidated view of their financial position. Another possibility is the ability to manage their finances and access tailored analytics and insights from one place.
For our AUD Nostro clients, should it be ruled under the CDR AUD Nostro accounts are included in the scope of eligible products, it might mean (with your consent) the ability to share your account, transaction and balance information with ADRs.
Open banking opens up more opportunity for banks and other accredited organisations to deliver greater value for consumers and businesses, says Katherine. “For example, it will be easier for anyone to compare bank products when data can be accessed digitally in a consistent format across the ecosystem.” With the further extension of CDR across the economy there are even more opportunities for participants to enhance customer offerings, innovate and simplify processes.