Open Banking in Australia
Regulation
The introduction of the Consumer Data Right (CRM) on July 1, 2020 saw the launch of the first phase of open banking in Australia, marking the debut of a new era in the domestic banking sector.
By the end of 2020 open banking had yet to deliver substantial consumer benefits. Part of the reason for that is the red tape and high costs associated with becoming an accredited data recipient.
Under the CDR system, consumers consent to a transfer of their data from a data holder (e.g. a bank) to an accredited data recipient.
An accredited data recipient has been accredited by the Australian Competition and Consumer Commission (ACCC), the lead regulator of the CDR, to receive consumer data and use it to provide enhanced products and services, as long as they can adequately protect the data from misuse.
A 2020 study found a lot of excitement about open banking within Australiaâs financial services industry with 71% of respondents, including banks, brokers and fintechs, stating that they intended to use CDR data.
Among the key challenges to making the CDR regime a success, respondents cited complexity/clarity of the rules (54.2%), customer education (50%), compliance (45.8%) and cost (29.2%).
The most popular use cases centre around using financial and account data to streamline processes and improve user experience. Verifying income and expenses was called out as valuable by 56% of respondents, followed by onboarding automation and account verification.
A recent proposal suggests the creation of a tiered accreditation system that would enable a faster onboarding process and allow smaller players to be able to benefit from open banking data.
In Australia, the introduction of open banking is being done in phases. Consumer data relating to credit and debit cards, deposit accounts and transaction accounts have been available since July 1, 2020. Consumer data relating to mortgage and personal loan data followed suit on November 1, 2020. Banks other than the Big Four â CommBank, NAB, Westpac and ANZ â have until July 1, 2021 to provide access to open banking data. Open banking is expected to be fully implemented by November 1, 2022.
Most respondents believe Open Banking will go mainstream by 2025.
The main goal of the CDR regime is to help customers monitor their finances, utilities and other services and compare and switch between different offerings more easily. The system also aims to encourage competition between service providers, enabling customers to access products and services that better suit their specific needs.
Banks Active in Australia
NAB and CommBank both have developer portals which are open to any developer or interested party which has been accredited with the ACCC. They offers open banking APIâs for various services including: product specific information, account balances, account details, transactions, customer information, direct debits, payees and scheduled payments.
Both offer online documentation and support. Access to these APIâs is free but it is difficult to obtain information about fees for their use without making direct inquiries.
These APIâs would be useful for BNPL payment services.
Fintech API Aggregators active in Australia
Adatree
This is a technology company specialising in Consumer Data Right compliance, released in 2019 the first aggregation of banking product information using the new Open Banking Application Programming Interfaces (APIs).
Adatreeâs offering is the first to aggregate all available banking product information APIs into one single API so that product information can be centrally accessed. This removes the need to connect to each bank individually. The API can be accessed through the Adatree Developer Portal, free of charge. As other banks and credit unions release their product information APIs, these will also be included in the Adatree product aggregation API.
The product aggregation API will enable comparison of data across banks for product features, product pricing and customer eligibility. Product information APIs do not contain any personal data and is the first phase of Open Banking.
Basiq
Financial aggregator startup Basiq created its open banking platform, categorizing its APIs into data services. It provides affordability APIs that give banks a more accurate view of a customerâs financial position during the loan application process.
Up
Up, a digital bank that operates under Bendigo and Adelaide Bankâs ADI (authorized deposit-taking institution), uses TransferWiseâs API to enable customers to make low-cost international transfers directly from their transaction accounts without having to leave Upâs app.