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Major banks have less than a year before the first phase of the new open banking rules take effect, but a recent survey has revealed that as many as 83% of consumers are either not aware or not sure about the changes on the horizon.
Likewise, two-thirds of Australians are unwilling to share their financial data with non-banking organisations, according to the same poll conducted by Accenture. The findings underscore the challenges faced by fintech companies and other digital giants in taking market share from established financial firms, the poll found.
Accenture questioned more than 2,000 Australian consumers during May 2018; a year after the government announced open banking rules, following recommendations by the Review into Open Banking. The review said consumers should be given more control over their data, including the choice on who can have it and who can use it.
“Banking is the first sector of the Australian economy to which this right is to be applied and open banking is the way that this is to happen,” said Open Banking Review chair Scott Farrell in the final report.
In its May announcement, the Government said that for major banks, the new rules will cover credit and debit cards, deposit and transaction accounts by 1 July next year. Mortgages will be covered starting 1 February 2020, followed by data on all other products by 1 July. Meanwhile, all other banks will have an extra 12 months to comply.
According to Accenture, the new rules allow consumers to grant third parties — such as technology providers, fintechs, telecommunications companies, retailers and other corporates — access to their financial data, enabling consumers to compare products and services more easily.
Some 84% of the respondents would trust only their own bank with their financial data even if a third-party provider were to offer added benefits to secure access to the information. Privacy ranked as the top concern, with 64% of respondents citing it as the main obstacle to sharing their financial data with third parties. The results will place added pressure on brokers who are often the first line of customer interaction for credit related transactions.
“Tech firms, online retailers and fintechs currently face an uphill battle competing with Australia’s traditional banks for customers due to the banks’ stronger trust connection with their clients,” said Alex Trott, who leads Accenture’s Banking practice in Australia and New Zealand.
“But an emerging generation of consumers is much more receptive to open banking and as their understanding and awareness of open banking innovations grows, it could have a big impact on the financial sector. Traditional banks cannot afford to rest on their laurels, as these new rules open the door to new competitors targeting young Australians,” he added.
