Open Banking – What is it and what does it mean for me?
Australians now have access to open banking. The first phase was launched in July 2020, allowing customers of the big four banks to securely share their banking data with other Australian accredited banks and finance organisations.
The initial launch of open banking was well received by the Australian Banking Association (ABA), as the new project would allow consumers to “search for a better deal on banking products”.
The sharing of data will also ensure the banking industry remains competitive for consumers, who will have the ability to use their own data for their own benefit.
What is Open Banking?
The Australian Banking Association has advised that open banking will give you the ability to share your banking data (such as your transaction history and account balances) with third parties that have been accredited by the ACCC (Australian Competition and Consumer Commission). These third parties may include other banks, financial institutions or other authorised organisations including fintech businesses. You have the ability to control which third parties can access your data and how they can use that data under the open banking framework.
How can Open Banking be used?
As a consumer you will now have multiple ways to utilise open banking to your advantage.
For example, if you are looking to switch to a new bank for a broad range of services including a savings account or credit card, you would usually need all of your previous banking documentation (such as personal identification and transactional history) in order to apply at that bank. However, with open banking, the ability to transfer this information from your existing bank to your new bank is simple and can save you time on pending applications. You can also choose to use open banking with authorised providers, in order to recommend services that may be relevant to your specific financial situation.
What types of data can I request to share through open banking?
ANZ, Commonwealth Bank, National Australia Bank and Westpac customers can request and share their transactional accounts, deposit accounts, credit cards and debit card data with accredited data recipients. Accredited data recipients are the authorised providers who receive a consumer’s data after they have given consent for it to be shared.
As of November 1st 2020, the ability to also share further details such as home loans, investment loans, personal loans, joint accounts, closed accounts, direct debits and scheduled payments in addition to payee data with accredited data recipients.
Smaller banks and authorised deposit taking institutions outside of the big four banks will also gain access to open banking within the next 12 months, meaning their customers can also utilise the service.
What value could open banking deliver to consumers?
According to the ABA and Australian Government, key benefits of open banking may include:
(1) helping you sign up more easily for certain financial products
(2) saving time in switching providers
(3) finding products more tailored and personalised to your situation
(4) supporting you to have a more holistic view of your finances.
However, with open banking still in its infancy, it may take some time for consumers to recognise the full benefits of the scheme.
What do you have to do to share your data via open banking?
You can start your journey with open banking through the accredited data recipient’s website or app. You can then follow prompts to share your data with a recipient. The CDR website outlines this process:
Give consent. You will need to first give permission to the accredited data recipient provider to access your data. You will do this on their website or app through their Consumer Data Right page.
Perform an identity check.
You will then be redirected through to your bank’s website or Consumer Data Right page and from there will need to verify your identity.
Confirm data to be shared.
Once your identity is confirmed and you are given access to that page, you will be asked by your bank to confirm what data you want to share, how you would like it to be shared and for what period.
Your data will then be transferred electronically through an application programming interface (API) to the prospective data recipient in a machine-readable format.
Use the provider’s service.
Once your data is shared, you will then be directed back through to the accredited data recipient’s app or website to begin using their service. For example, if you’ve decided to share your data with an accredited budgeting website, you’ll now be ready to receive information and alerts based on your real data.
Is open banking secure?
The framework for open banking has been approved by the Government and the first phase is now in motion, though there has been much discussion in the media around security and privacy concerns.
Although some consumers may be nervous about the security of the CDR, they should not forget that the ACCC is regulating this scheme and has put in many safeguards to protect consumers and their data. Consumers will also never be asked for their current online banking password when accessing the CDR to share content.
How will open banking be used at UDA?
As part of our service, your personal case manager will liaise with your creditors on your behalf. Our aim is to have a resolution within our service level agreement of 2-6 weeks.
When requesting and receiving documentation, on occasion there can be delays due to privacy requirements from banks, collection agencies and other financial institutions. Open banking will see a fast and accurate transfer of your personal financial data, when required for transparency supporting your debt negotiations. Getting back on track couldn’t be simpler.