Two new bills were read in parliament yesterday which could change banking and competition in Australia.
Customer owned banks are celebrating the introduction of one bill which will see key reforms to improve the ability of credit unions, building societies and mutual banks to compete with the big four.
The Treasury Laws Amendment (Mutual Reforms) Bill 2019 amends the Corporations Act to define a mutual entity, reform the demutualisation rules and create a mutual-specific Mutual Capital Instrument (MCI).
As well as increase competition potential, the Customer Owned Banking Association (COBA) said the reforms will enable the sector to more easily raise capital.
Speaking about the reforms for mutual banks, CEO of COBA Michael Lawrence said, “With greater competition, comes greater consumer outcomes. Australian consumers need, want and demand greater competition. The introduction of this Bill into parliament is a step towards achieving that.
“If the Royal Commission has shown us anything, it’s what can happen when competition is lacking, and the big players are able to take their customers for granted.”
The second bill read in parliament was the Treasury Laws Amendment (Consumer Data Right) Bill 2019, which would see the introduction of open banking, expected to come into effect on 1 July this year.
Ian Pollari, KPMG Australia’s head of banking and global fintech co-lead, said it was a positive step towards Australia’s open data eco-system.
“It will hopefully provide a greater level of certainty for banks, fintechs and other third-party providers investing in the area. There is however, a lot of work still to be done, from a rules, standards and implementation standpoint - for regulators, such as ACCC and impacted entities.
“With the timelines published by the ACCC in January, there is substantial complexity in meeting compliance and technology requirements. In parallel, consumer education and awareness will also be critical and will need to be considered early in the process of engagement.
"The open banking regime is a once-in-a-generation opportunity for Australia to lead the world in implementing a consumer-driven, economy-wide data sharing framework.
“Over time, open banking will lead to new business models and change how many financial institutions operate and extend opportunities for them to deliver different, valuable services to consumers and businesses that extend beyond traditional banking products and services."