What Open Banking Needs to Really Take Off

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It has been 12 months since customers of Australia’s big 4 banks have been able to consent to share banking data with accredited data recipients. Open banking is still very much within the implementation phase in Australia with few companies actively operating as accredited data recipients. At this point in time the most profitable use of open banking accreditation is helping other companies enter the open banking ecosystem. This is not to say there isn’t very good progress being made, recent developments are cause to be very optimistic about the state of open banking in Australia.

Data Holders

As of July 1st, 2021, all non-major Australian banks and lenders were to be active data holders in the open banking network. Only a small number of these institutions were enabled at this date with many institutions being granted extensions, some up to 18 months. To ensure equality of access for all Australian consumers and comprehensive comparison of financial services products all banks and lenders need to be enabled as data holders.

Controlled Sharing of Open Banking Data with Non-ADRs

With the current open banking regulations, Authorised Data Recipients can only share open banking data or any insights from this data with other Authorised Data Recipients. This greatly complicates many practical open banking applications, an example being loan application processing. A lender would be required to go through the CDR (Consumer Data Right) accreditation process to access even the yes/no results of a processed loan application.

On the 1st of July 2021 the Australian government announced that it is in the process of drafting changes to the regulations to allow limited access to open banking data for non ADRs. These changes are an important step that will unlock many opportunities in the open banking space.

Open Banking Write Access

The ability to receive open banking data is a very powerful tool with many applications but to act on this data, for example applying for new financial services products of transferring funds to a different account to avoid overdrawn fees, still requires customers to use traditional banking channels. Write access would give consumers a truly seamless open banking experience with accounts across different banks being able to be managed as a single portfolio and easy access to new financial services products to take advantage of the best deals.

PayTo ( https://payto.com.au/ ) are looking to use the New Payments Platform to provide a bank agnostic solution for real-time bank account payments. PayTo is also being touted as a possible solution for adding payment capability to the open banking. Whether or not this occurs the combination of PayTo and open banking paves the way for a new world of flexible banking solutions.