Customer-owned banks are well positioned to take advantage of new Open Banking regulations, according to one of Australia’s leading mutuals.
P&N Group, which includes Western Australia-based P&N Bank and Northern NSW and Queensland mutual BCU, are the latest in a string of customer-owned banks to take on an Open Banking partner, with fintech Frollo enabling them to become Accredited Data Recipients under the Consumer Data Right (CDR) regulations.
“Open Banking allows us to get a broader picture of the customer’s finances, in order to be able to assist them with managing their own finances,” said P&N’s chief intelligence officer, Erik Fenna.
“We call this ‘personal financial empowerment’. It’s going to allow us as an intermediary for the customer to give them a much more comprehensive view of their finances.”
“It’s not so much that it is empowering for us, it empowers us to help the customer. Historically, it was very difficult to get data: in a loan application, where you have to provide 3 months of financials, people were sending us PDFs of their finances.”
“You can get a statement from another bank and then scan and process it, but in the case of loan application, it will allow us to be more efficient and to produce an answer – preferably yes – in a shorter period of time if it comes in structured data rather than PDFs.”
“In the context of financial empowerment, currently we have no ability to provide that function to the customer because we have no ability to aggregate the information from the other banks – until Open Banking.”
Mutuals have increasingly been teaming up, with P&N’s linkup with East Coast-based BCU just one of a string of mergers that, in the case of Teachers Mutual and Pulse, have already happened and in the case of Newcastle Permanent and Greater Bank, are still in the works.
For Erik Fenna, the mutual sector mergers are helping them to get ahead when it comes to Open Banking.
“Consolidation gives us the ability to use the benefits of scale to invest more in a targeted approach to produce outcomes that are beneficial to the consume,” he said. “For smaller banks like ourselves, we have a fundamental reliance on partnerships to deliver this capability.”
“We’re not developing the code for this, we’re partnered with Frollo who have invested their own money, time and effort into developing it, and then provide it as an integrated system for companies such as ourselves.”
“We get the benefits of partnership, and the agility that comes from partnering with a fintech, rather than spending the equivalent or more developing the tech in-house.”
