Security issues around data access remain and need to be addressed as the government pushes for an open banking framework.
Drawing from its experience in Japan, the fintech Moneytree founded a permission-based sharing platform, Moneytree LINK, which allows people to share their financial data – as long as it is on their own terms and secure.
“When we started Moneytree, we decided to be absolutely transparent and radically upfront with people. This approach has earned us the trust of millions of users, and has given some of Japan’s biggest financial institutions the confidence to partner with us," said MoneyTree chief executive Paul Chapman (pictured).
With the Federal Government planning to implement an open banking regime, Chapman believes that data sharing initiatives in Australia will fail unless consumers have trust in how their data is being used.
“There is no doubt the potential benefits to consumers of more accessible financial data are tremendous and will be transformational. However, most people don’t understand how their data is being used now, and an open banking regime could create greater confusion,” he said.
A set of standards
“It is important that Australia implements an open banking regime in a way that promotes and safeguards consumer trust and allows people to feel in control," Chapman added.
The Moneytree CEO has previously called for a set of standards that will ensure privacy and transparency in the sharing of data. The standards include an explicit opt-in, which would give people a sense of control of their data, allowing them to opt in at all points of the product/service lifestyle. Similarly, a unified opt-out would need consent when data is shared.
"It is common to receive approaches from ‘partner’ companies. People should have a choice whether to opt-in with each partner, and should be able to opt-out via the service where the data was first shared,” Chapman said.
Lack of trust was one of the key issues addressed by the Productivity Commission in its final report on data availability and use, released in May. In its report, it found that the “lack of trust and numerous barriers to sharing and releasing data are stymieing the use and value of Australia’s data”.
While the Commission acknowledged concerns around privacy, it noted that “the incremental costs associated with more open data access and use - including possible impacts on individuals’ privacy and willingness to share data - are expected to be minimal, but they will exist”.
“When it comes to open banking it will be a tricky balancing act between maintaining consumer privacy and utilising open data to drive more competition.”
A tricky balancing act
Among the Productivity Commission’s recommendations to strengthen data sharing and privacy, was the introduction a new Data Sharing and Release Act, a new national data custodian and “accredited release authorities” to oversee the process to collecting and accessing data.
Research from RFi Group has revealed that consumers trust banks with their data over other organisations including government and technology. This data is consistent across ten major markets including the United States, United Kingdom, Singapore and China.
“Interestingly Generation Y are no different and also have the most trust for banks; although they are also more likely to trust tech/emerging companies,” RFi Group research director Amit Khan said.
“However, trust and information security is just as important to these consumers than accessing better products and services. When it comes to open banking it will be a tricky balancing act between maintaining consumer privacy and utilising open data to drive more competition.”
For a full, wide-ranging analysis of open banking in Australia, see the July edition of AB+F Magazine.