Open banking is set to reshape the way customers access their data and banks and other financial institutions are now getting ready to start implementing the system from next year.
Australia’s four major banks must have implemented an open banking standard by 1 July 2019 and other banks will need to follow by the same time in 2020.
One company, which has been working with open banking before it even began, said the regime will make things much easier.
Moneytree launched in Tokyo, Japan, six years ago based on the idea customers should have better access to their data. It started with a personal finance app which categorised users’ spending and then they began to open out into other areas.
Soon they were working with banks and institutions to help them create better experiences for their customers.
Now, banks, credit cards, real estate groups, accountants and superannuation are using the platform.
Ross Sharrott is one of Moneytree’s co-founders, its chief technology officer and executive director for Australia. He is also a member of the Advisory Committee of the Data Standards Body for the implementation of Open Banking.
Speaking to Australian Broker at Salesforce’s recent Financial Basecamp, Sharrott said it was “an opportunity” for brokers.
He said, “It can be much easier instead of making your customers print out their statement and bring it to you, you can say if you link your account here my system will hold this for you.
“The other thing is open banking is going to make product rate data available so it could be easier to compare rates so for example should I refinance or not?
“One of the opportunities for brokers though is if they can give value to the consumer and say hey you’re giving us the data once, you can leave the ability for me to read the data on an ongoing basis.
I’ll tell you if there’s an opportunity and then for the consumer they don’t have to do anything themselves.”
Sharrott said open banking can particularly help when it comes to responsible lending.
He added, “What we’re hearing in the market is some of our banking clients are interested to know, can I get a categorised view of how consumers are spending money, so I can be sure they can afford this loan?
“It can help them collect the proof that this loan is ok to underwrite. Instead of the consumer guessing they can share that data.
“Sometimes consumers have an incentive not to lie. Self-reported data, I can only give you this rate. But if I’ve access to this data so we’re sure of that data perhaps we can do a different rate.”
Open banking is simply the first step in Australian data-sharing. While in the future it is expected data on telecoms and energy will be shared, Sharrott said it is not like that where they originally started in Tokyo.
He said, “Here, property ownership is extremely high, including second third fourth properties in terms of investment properties. That’s fairly uncommon in Japan. That other thing here the CDR, Consumer Data Right, driving force behind open banking is much more ambitious.
“Japan was early in open banking but they don’t have that consumer data right to drive it beyond banking.”