Open banking is finally here in Australia, thanks to Scott Morrison, who saw how well it worked in the UK. You'll be able to control your banking data, which will make it easier to do things like switching banks and products. This, in case you were wondering, will help you to find better products and deals.
What is open banking?
Open banking will give you full control over the data that banks, lenders and other financial institutions have on you. At the moment, it's difficult for banks to send each other the information they have about you; it's also difficult for you to obtain all of your financial data (even though it's yours').
Not having your full financial picture and breakdown can make it harder to find the best and most appropriate financial products and services. Switching lenders, for example, can be a bit of a shot in the dark, but open banking should make things clearer, giving you more consumer power.
You still control your data, though, as the open banking laws dictate that you have to ask for your data to be sent to banks and other institutions. If you don't request for the information to be sent out, it won't be, as per the Consumer Data Rights (CDR) laws.
When does open banking start?
It's already started! The Big Four banks - CommBank, NAB, ANZ and Westpac - made some kinds of financial data available for beta testing when the relevant legislation went through Parliament. This legislation passed on August 1 2019 and as of now, the product data for debit and credit cards, deposit and transaction accounts are available through application programming interfaces, or APIs.
Can I access my own financial data?
You'll be able to do this from February 2020. The Big Four banks will have to give you access to your account, consumer and transaction data for your credit and debit cards, as well as your savings and transaction accounts. If you have any accounts or products with any of the Big Four banks, you can ask to see your own data or ask for it to be sent to another company or institution, as long as it's an accredited data recipient.
If you're with another bank other than the big banks, then your timeline will be different. It'll also be different if you're asking for data relating to other financial products.
Which types of financial data are available under open banking?
There are four main types of information that will be freely available under open banking.
The details of the features, rates and fees for each bank's financial products will be available through publicly-accessible APIs.
Your personal information, like your phone numbers, your email address and your residential and/or business addresses.
Your account data
Information about your particular accounts, like direct debit payments, regular repayments and your account balances will be available.
Your transaction data
Transaction data is the information on the transactions you make on your accounts; you'll be able to see how much you spend and where you spend it.
Which sorts of organisations can I send my data to and request it from?
All authorised deposit-taking institutions (ADIs) will automatically be included in open banking. Other institutions that receive and hold consumer data must be authorised to receive, hold and send data through the open banking system. This is necessary to make sure that they respect your consumer rights by abiding by CDR rules and maintaining governmental security standard.
How does open banking cost?
In Australia, it'll cost nothing.
How will open banking help me?
It'll help you in lots of ways. Before open banking started, it was harder to sign up for or apply for a financial product from a bank or lender other than your regular provider. It was easier to stay with your usual bank or lender because it already had your data, your transaction history and ID documents to hand, as well as any relationship it had built up with you over the years.
With open banking, your regular provider can simply forward all your data and history to a new institution so that signing up with or switching to will be pretty much seamless.
Open banking also makes it much easier to use budgeting tools and apps. You can send all your banking data to your favourite budgeting app, which will help you to monitor and manage your money much more easily. Having all your spending, saving and transfer information categorised and recorded can really help you to make the most of your money. There are several very popular budgeting apps in use in the UK after open banking launched there.
Is my financial data safe?
As you might imagine, safety and security has been the biggest concern with open banking. The companies, banks and other institutions that take part in open banking have to stick to the very strict security standards laid down by the government when they handle your data. They'll be subject to the Privacy Act and will only be able to access, use or send your data at your request.
Is open banking only in the UK and Australia?
The UK has been using open banking since January 2018, using open APIs. The European Union has also started open banking, allowing payments initiation and account data retrieval by third parties since May 2018.
Other countries are following suit, too, with the US and Singapore making moves towards open banking, open APIs and data sharing.
Why is open banking so important?
Not only does open banking give you control over your data, allowing you to switch providers and banks much more easily, but it will have knock - on effects throughout the whole financial sector.
You'll be able to make more informed choices when you're looking for new or alternative financial products, so you can find the ones that are the most appropriate for you. If one provider or set of features proves to be more popular with consumers as a result, then open banking will drive competition within the finance sector, with providers having to develop and innovate harder than ever to secure their market share.
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.