The still sticky issue for open banking
As the government’s open banking initiative kicks off officially in three months, Australia is still one of the more hesitant nation's to embrace the idea of data sharing, writes RFi Group’s Brenda Liang.
A legislation that has been in the works over the last few years and finally in the early stages of implementation, open banking is met with a low level of awareness and a modest amount of interest in Australia.
As open banking is slowly being introduced, awareness is understandably low.
According to RFi Group data, only 9 per cent of consumers are aware of the term ‘Open Banking’ as of July 2019, a moderate increase from 7 per cent over the last quarter.
With a shift in control of personal financial data from corporations over to consumers, access to more personalised advice and tailored product recommendations is one of the biggest benefits for consumers.
Another advantage is the ease at which consumers can apply for new products or switch banks with a click of a button.
As open banking remains a foreign concept to many Australians, there is opportunity for Australians to be better informed and be able to see the prospective benefits of this legislation
As such, open banking is envisioned to drive innovation and competition within the financial sector.
RFi Group found nearly 2 in 3 consumers consider a Big four bank as their main bank.
However, the new regulations will mean more opportunities for competition, particularly with the increasing number of new market entrants such as the neobanks.
Source: RFI Group
Nevertheless, the myriad of potential advantages this legislation could bring is slow to unfold and Australia stands as one of the more hesitant nations to embrace the idea of open banking.
RFi Group data supports this notion, as 39 per cent of Australians are reluctant to share their financial data in exchange for these benefits, compared to an average of 30 per cent of consumers globally.
The cautious nature of Australians could well be driven by security concerns.
While participating institutions must adhere to strict security standards for the safe sharing of data, RFi Group found 3 in 5 Australians strongly value the privacy of their personal data over access to tailored products and services. Furthermore, 1 in 2 indicated the need to be incentivised to share their personal data.
These sentiments exacerbate with age, as older Australians place greater value in their personal financial data and are therefore more apprehensive of possible data breaches.
As open banking remains a foreign concept to many Australians, there is opportunity for Australians to be better informed and be able to see the prospective benefits of this legislation.
By giving consumers ownership and control over who holds their personal financial data and how it could be used, the full potential of open banking can only be realised at their own discretion and perhaps in due time.