The federal government is introducing legislation this week that is “an important step to making the open banking reforms a reality”, according to the Australian Banking Association (ABA).
ABA executive director of policy, Christine Cupitt, said the legislation is critical for moving the consumer data right reforms forward.
“Giving customers greater access to their data will make it easier and simpler to shop around for a better deal on a credit card, followed by home loans and other banking products,” she added.
The first stage of the open banking initiative, implemented by the major banks on 1 July, has been linked to “major improvements in the levels of transparency” across a wide range of banking products by Treasurer Josh Frydenberg.
The federal government intends that by February 2020, consumers will have control over what data their bank shares, which secure third parties it is given to, and for what purposes. According to Frydenberg, progress to the February launch is “well advanced.”
The government expects the reforms to not only lead to better prices, but the creation of more innovative products and services customised to individuals’ needs, as well as more efficient processes for businesses – all of which passes savings through to customers.
Rebecca Schot-Guppy, GM of FinTech Australia believes that the reforms will have an “exponential and transformative” impact on the financial services sector.
“It is a key building block for fintechs looking to create new services that enhance competition and improve financial literacy,” she said.
However, Schot-Guppy reminded that the true customer benefits will likely not be felt for quite some time.
“This rollout is just the first hurdle of what will be a long process before consumers will see the true impact of this reform.
“If the UK experience is anything to go by, the consumer data right and open banking policies will require ongoing support and promotion for them to realise their potential,” she added.