The missing pieces in open banking

  • By Christine St Anne

Introducing write access into open banking and ensuring consumer buy-in with a considered approach to education will be key in taking the framework to the next level.

This was the assessment made by a panel of open banking experts at the recent Australian Retail Credit Association (ARCA) Executive Breakfast in Sydney

“Open banking is to personal finance what HTML is to the internet. It's just the technology that sits behind the use case. What will really resonate for consumers is an understanding and awareness of the value they can get from open banking such as account aggregation,” Finder CEO and co-founder Fred Schebesta said.

However, here, he said that write access will be crucial in really driving the full benefits of open banking

Read access only allows data to be shared, however under write access, third parties can also initiate transactions on behalf of their customer.

For Schebesta, introducing write access into the framework will open up a myriad of possibilities that will really engage consumers with open banking.

The ability to switch accounts in a secure way is one such benefit that would drive consumer buy-in in an open data world.

“Write access takes open banking to the next level as it turns insights for consumers into action. Imagine a world where an app on your phone tells you when to switch energy provider to save money and then goes ahead and makes the switch for you. That will be a significant change and will drive usage and uptake of open banking.”

Allens senior associate Alex Ortner concurred but for Westpac chief data and strategy officer Jamie Twiss, the immediate challenge for the industry is to get read access up and running.

“We need to demonstrate real value to the customer within a secure and functional framework before we think about how to extend the consumer data right,” Twiss said.

As highlighted earlier by Schebesta, innovative use cases will be needed to attract consumer attention to the benefits of open banking.

Once open banking becomes live, Westpac’s focus will be on providing their customers with “better insights into their finances and making it easier and convenient to manage their money”.

There is a danger of an industry-centric view around open banking... we need to ensure that we design for the customer and ensure good customer outcomes - Jamie Twiss, Westpac

Here partnerships will be key.

“As open banking develops, it will absolutely make sense to partner with other businesses to deliver value for our customers,” Twiss said.

Importantly, the panel highlighted that an effective and robust communication campaign was essential if consumers are to embrace open banking.

According to ARCA, consumer awareness of comprehensive credit reporting might be a good case study of how consumers will engage with open banking.  Research from ARCA’s consumer education campaign, Creditsmart showed an increased awareness from 17 per cent in 2018 to 28 per cent in 2019.  

Highlighting experience from the Netherlands, Ortner emphasized that messaging needs to be balanced and careful.

“The take up of open banking in the Netherlands was slow in part because of the volume of consumer information on the GDPR [General Data Protection Regulation].

“Consumers were inundated with information on privacy and data protection. Therefore, any fears and concerns need to be addressed by a balanced communication strategy,” Ortner said.

“Privacy is obviously important. That’s why its positive to see ARCA and the ACCC doing a good job by focusing on a more nuanced campaign to education and awareness that informs consumers about their rights rather than basing it on fear.”

For Westpac’s Twiss it is important that open banking is not seen as an industry initiative.

“There is a danger of an industry-centric view around open banking. While we may be optimistic about sharing data, we need to ensure that we design for the customer and ensure good customer outcomes,” Twiss said.

“The challenge for the industry is to deliver good use cases that deliver clear benefits for consumers.”