The priorities now for open banking
The consumer data right will mean that banks will no longer just compete in the financial sector but in the “data capture” market and that will not be without its challenges.
In the first week of August, the consumer data right passed into legislation.
The initiative was branded as a “win for competition”. It will also shift Australia toward a more open data framework.
Indeed, Australia’s open banking will also include the energy and telecommunications sector.
For Deloitte open banking partner Paul Wiebusch, the legislation of the CDR will now spur these to start thinking about the “application of the CDR to their organisation”.
He also noted that both the Treasurer and the Prime Minister have commented that the insurance including health insurance are also potential sectors that could come under the open data framework.
Wiesbusch sees this as a wider global trend with the UK also signalling that it is looking at including the superannuation industry in its open banking framework.
A recent paper by KPMG noted that the introduction of the CDR will now drive banks to participate in the “data capture market”.
The joint authors of the paper, KPMG national sector leader, Ian Pollari and partner Brett Watson highlighted consumers will now be able to share their data with accredited third parties such as utility providers, fintechs or other banks, leading to more transparent decision making for both parties.
“This is not without challenges as banks will no longer just compete in the financial sector but in the data capture market”, Pollari and Watson said.
By properly acting now, the banking industry was redefined to the betterment of Australian consumers and businesses - KPMG.
Here they believe that it is imporant that that organisations are ready not just to comply with the CDR, but to capitalise on the opportunities it presents.
To do this, these businesses will need to have the abilty to manage the the inflows and outflows of customer data from day one.
“The challenge is to have the capability to link customers to their data, and facilitate its exchange with other parties whilst maintaining data security – key to the success of open banking,” they said.
Data privacy ad security will be key in underpinning confidence in the frameowrk. – also highlighted by Deloitte’s Wiesbusch.
According to KPMG, the banks will need to focus on managing new services and capabilities, for compliance requirements in the first instance, and for some, also commercial opportunities in areas such as consent management and digital identity.
They also see competitive pressure between banks will increase and staying ahead of the pack may require partnerships with – or acquisitions of – fintechs or other third parties.
“While other long term considerations are numerous” KPMG believes that “few are as important as consumer education and engagement”.
“Whilst the appeal of open banking is obvious to those in the know, many Australians will need to be shown why open banking is valuable to them – especially when it involves the sharing of their personal data,” KPMG said.
Here banks need to engage with their customers to ensure they “truly realise the potential of the new data ecosystem”.
In fact, according to Rfi Group research 13 per cent of Australians are willing to open up their data. Furthermore 6 out of 10 Australians trust their banks with their data.
For KPMG’s authors the regulatory frameworks introduced by the consumer data right is broader and deeper than similar legislation around the world.
“Of course, this is all up to Australian organisations ‘seizing the day’ and fully realising the opportunities presented by [the new legislation].
“It all starts with open banking and if we get this right we should be able to look back in five years’ time and realise that by properly acting now, the banking industry was redefined to the betterment of Australian consumers and businesses.”