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The government’s support of open banking has been labelled a “sensible approach” by the industry.
A government statement said it will act to implement the recommendations in the final report of its independent review into open banking. The system will be phased in from July 2019, paving the way for the introduction of the government’s Consumer Data Right (CDR) in the banking sector.
While financial data like credit and debit card, deposit and transaction data will be available from then, mortgages will not be included until February 2020. Personal loans and other data will be available from July 2020.
As part of the budget, treasurer Scott Morrison outlined $44.6million in funding over the next four years for a CDR, which will allow for users to access and transfer their data.
Open Banking will allow customers to share personal information with other financial institutions to help them find a better deal on expenses such as electricity bills, telecommunications and other items.
Australian Banking Association (ABA) CEO Anna Bligh said it was important to get this reform right with the security of customer data at the forefront of policy making.
She said, “The ABA welcomes the government’s announcement on open banking, which charts the way forward for this important reform which will empower customers.
“The industry is pleased that the government has outlined a phased introduction that enables it to design a good system the will both benefit customers and protect their data.
“Banks are committed to delivering this reform within the tight timeframe and are looking forward to seeing further details contained in the draft legislation as soon as possible.”
Spotcap Australia and New Zealand managing director, Lachlan Heussler, believes the news will also help small businesses thrive by removing points of friction in everyday financial transactions.
He said, "The government response to the open banking review promises to revolutionise the current financial landscape in Australia, increasing choice and driving further innovation in the fintech and financial service industries.
“Open banking has undeniable benefits in terms of consumer choice and experience. It will break down barriers, encourage competition and help consumers save money through improved price comparison and service switching options.
"As a fintech that is committed to empowering Australian businesses with accessible finance, open banking will allow Spotcap to serve customers in a much faster, safer and scalable way. It will allow us to innovate and develop new ways to help small businesses flourish and grow.
"Spotcap has already helped thousands of small businesses in Australia. We put the customer at the forefront of everything we do, and open banking will open the doors for us to help even more Aussie businesses gain access to much-needed capital to help them succeed. It's an exciting time for our industry, consumers and small businesses across Australia.”
The funds allocated in the budget for the CDR are split between three separate organisations. The Australian Competition and Consumer Commission (ACCC) will receive $20.2m over the four years, the Office of the Australian Information Commissioner will receive $12.9 and the Commonwealth Scientific and Industrial Research Organisation (CSIRO) will receive $11.5.
