The open banking era: why the customer will be the major beneficiary

Open banking has the potential to drive greater financial transparency and presents an opportunity to create better banking products. Here’s a view on why the guiding principles of open banking are instructive for businesses looking to step up their offerings.

The past 12 months have seen a confluence of events that caused purse strings to tighten and people to rethink how they handle their finances. While mass migration to digital platforms has changed the way consumers interact with their finances.

Collectively these events have led to a shifting of gears in the financial world. Greater transparency and a frictionless customer journey have become priorities for both consumers and businesses.

It was these considerations that were integral to the arrival of open banking in Australia last year. This open banking system allows customers to share their personal financial information through API’s with third-party providers. These providers then have direct access to customer’s account information, providing opportunities for new products to be built that cater to changing customer needs.

Looking into the near future, the reimagination of financial products and services will likely centre on putting consumers squarely at the heart of the experience. Key to this will be the individual consumer’s right to choose how they use their financial data.

In February, the Big Four banks across Australia began to share transaction data with a growing list of accredited providers. And customers will be able to share their data with third-party FinTech platforms of their choosing.

This is a timely development as many consumers introduce budgetary measures and focus closely on their finances in the wake of the economic pressures of 2020.

Accordingly, new mortgage lending apps, spending apps that manage split bills, and investment apps are emerging to help people with these challenges.

One example is the financial service app Frollo, an Australian-owned app that helps consumers track and manage their money through open banking. Frollo, incidentally, was the first FinTech in Australia to become an Accredited Data Recipient under open banking regulations1 .

Others are following Frollo’s lead in developing platforms that empower consumers. New Zealand-founded investment app Sharesies (launching in Australia this year), aims to give its users the power to run and manage their own investments. Solutions such as these are a catalyst for the wider exploration of trading and investment opportunities.

It all makes good sense too – helping consumers throughout uncertain times is a well-trodden path in building brand loyalty.

Putting the customer first

Let’s return to the key principle of open banking: empowering the end-user and giving them the smoothest, most transparent customer experience.

With transparency in mind, it is paramount that businesses make the effort to communicate these consumer-centric features to customers in a way that clearly highlights their value. If consumers get frustrated or don’t trust the system, they can abandon their efforts to learn what these changes will mean for them, and won’t implement them on their own.

Accordingly, education around advantages and safety will prepare most consumers for an experience that provides day-to-day convenience, much as open banking is set to do.

Such frictionless experiences that zero in on the customer are well understood at Facebook. Services like Messenger, for example, provide a direct connection between business and consumers which not only humanises brands but allows the business to provide support and education when needed.

Customer-centricity shouldn’t just be considered a philosophy to get ahead either. It’s also worth considering what’s at stake by providing a sub-par experience in a world of increasingly digitally-savvy consumers.

Resources like the Zero Friction Solutions Guide help businesses understand the full impact of friction and how to transform the way they create seamless human experiences. As financial services businesses continue to embrace trends like these and develop products around them, consumers will ultimately become more engaged and ‘sticky’.

That’s why open banking is a welcome development. At heart, it is another step to meet the growing expectations consumers have for frictionless and personalised experiences.

Adhering to a customer-centric view – a core tenet of open banking – means developing products that solve consumers’ problems efficiently, or partnering with those who already have them. And we’re sure to soon see more of this from the industry’s genuine visionaries.

By Nick Tubb, Head of Financial Services, Facebook ANZ



  1. Frollo,, Frollo announced as the first FinTech to become an Accredited Data Recipient; published 05/2020.

Credit enquiries full steam ahead – but where’s the tipping point?

Credit enquiries are at their highest levels in 18 months, according to the latest CreditorWatch Business Risk Review. This indicates business conditions are normalising as companies begin trading at pre-COVID levels.

Other data, including higher than expected economic growth of 3.1 per cent in the December quarter and a falling unemployment rate, also indicate Australia’s post-COVID economic recovery is both sustainable and in full swing.

Nevertheless, the end of government measures such as JobKeeper that artificially supported the economy during the worst of the pandemic is yet to take effect across the broader business sector.

Positive signs ahead

According to the March CreditorWatch Business Risk Review, growth in credit enquiries has been accelerating over the last six months whilst debtor court cases have bottomed out over the same period.

“While the number of external administrations rose in early 2021, on an annual basis these have now fallen over thirteen consecutive months. The average number of external administrations over the last six months is fourteen per cent lower than for the six-month period to September 2020,” said Mr Patrick Coghlan, CEO, CreditorWatch.

“This is a metric to watch given the economic forecast for 2021. We expect to see a rise in the number of administrations, especially with JobKeeper having come to an end,” he adds.

Payment default figures on the up

In line with administration figures, payment default numbers are also on the rise, increasing by 13 per cent in the March 2021 quarter.

“The number of payment defaults has fallen for the past five consecutive months, which gives off conflicting signals. With government stimuli recently ending, we’ll be watching closely as we enter a post-JobKeeper economy to see how this changes,” Coghlan says.

Defaults: Industry deep dive

CreditorWatch recently crunched the numbers around the likelihood of defaults among different industries. Defaults suggest a business is in financial stress and complement trends in administration figures.

“Construction is one industry worth calling out when it comes to the upcoming propensity for default,” said Mr Harley Dale, Chief Economist, CreditorWatch.

“The number of administrations in this sector fell from 24 per cent of all insolvencies in the December 2020 quarter to 15 per cent of all insolvencies in January 2021, with a probability of default of 4.49 per cent,” he said. This indicates payment conditions in the construction sector have improved, with the industry still being supported by the $25,000 homeowner grants.

Across the board, there is a low probability of default, with businesses in the healthcare and social assistance, arts and recreation services and agriculture, forestry and fishing sectors among the least likely to default. Transport, postal and warehousing, public admin and safety and professional scientific and technical services are among the industries that are most likely to default.

Best and worst performing sectors for payments

Sectors where payment times are improving include:

  •  Manufacturing (-15%)
  • Electricity, gas, water and waste services (-28%)
  • Retail (-23%)
  • Accommodation and food services (-57%)

Sectors where rising payment times are a concern include:

  • Healthcare and social administrative assistance (+140%)
  • Administrative and support services (+49%)
  • Construction (+29%)
  • Professional, scientific and technical services (+25%)

What’s the outlook?

Overall, expect voluntary administrations, court cases and default numbers to continue to rise next month as the withdrawal of government stimulus measures starts to reveal its true impact on the economy.

Data are accurate as of April 1 2021. ASIC data subject to change.

Banks pick up digital pace as over half of Royal Banking Commission recommendations not yet implemented

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The Open Banking implementation timeline – Frollo

The Consumer Data Right (CDR) officially launched in Australia on 1 July 2020. With banking as the first sector to go live, Open Banking is here and is a game changer for the financial sector in Australia.

Though, change at this scale doesn’t happen at the flick of a switch. Australia’s Open Banking implementation timeline currently stretches to February 2022 with a number of key milestones and a lot of upcoming work still ahead.

The Open Banking implementation timeline

The below timeline shows the milestones for implementation as currently known. Each of the implementation milestones adds new products or Data Holders sharing their data.

What’s included in the February 2021 CDR release?

As you can see in the timeline above, the February 2021 release consists of two things:

  1. Big Four Banks – Consumer Data phase 3
  2. Non- Major ADIs – Product Data phase 2

The Big Four Banks are the ‘Initial Data Holders’ and were the first to launch consumer data sharing in July 2020.

Although the Big Four have a lot of customers, the impact of Non-Major ADIs going live is not to be underestimated: there are over 100 Non-Major ADIs, with a lot of customers. The list includes banks like Suncorp, P&N Bank, Bank of Queensland and many more.

What’s the difference between CDR consumer data and product data?

CDR consumer data is data related to a specific consumer and their financial products. Depending on the type of product this can include transaction data, account balances, direct debits, payees and more.

Consumers can consent to sharing this data with accredited third parties.

CDR product data is information about the financial products a Data Holder offers, like features, rates and fees. This information is also called Product Reference Data and is publicly available to anyone via APIs.

What are CDR product phases?

The implementation timeline refers to three phases, each of which includes a number of different products.

Phase 1 includes

Savings accounts, call accounts, term deposits, current accounts, cheque accounts, debit card accounts, transaction accounts, personal basis accounts, GST or tax accounts, personal credit or charge card accounts and business credit or charge card accounts.

Phase 2 includes

Residential home loans, investment property loans, mortgage offset accounts and personal loans.

Phase 3 includes

Overdrafts (personal and business), business finance, investment loans, lines of credit (personal and business), asset finance, cash management accounts, farm management accounts, pensioner deeming accounts, retirement savings accounts, trust accounts, foreign currency accounts and consumer leases.

If you want to know exactly which products are in scope and why, read the guidance for Data Holders on the CDR website.

When in February is the CDR release happening?

There’s no one specific date on which every non-major ADI will publish their product data, and every Big Four Bank will make the additional products available for sharing.

Some Data Holders started publishing mortgage product information as early as December last year (for example P&N Bank and Credit Union SA, using Frollo’s PRD Portal).

Though it’s expected that by the end of February, most of the scope will be implemented.

Have a look at the official CDR phasing table for more details

How does this impact consumers and businesses?

Although the February 2021 release isn’t as big as the July 2020 launch, or the November 2020 release (when joint accounts became available), there are some exciting things to expect.

Product information

The availability of up to date, accurate product information for mortgages and personal loans via public APIs is an exciting prospect.

It means businesses can use information like product features, fees and rates from over 100 Data Holders to help consumers get a better deal on their finances.

As the most active data recipient using CDR data, we have noticed that banks have struggled to get all the required data into the correct format. This may mean that ADR’s that follow will need to interpret the data before using.

How the Frollo app uses product information

Frollo has been testing the use of Open Banking product information in our budgeting app over the last few months, with a number of beta features:

  1. Real time product information showing rates, fees and features for accounts linked using CDR
  2. Product comparison showing the real impact of different savings account on your finances
  3. Next best action showing users when they’ve missed their bonus interest and what they need to do to receive it going forward

Consumer data

When each of the Big Four Banks has implemented the February 2021 scope, their customers will be able to share their data for products like overdrafts, lines of credits and cash management accounts with accredited third parties.

How the Frollo app uses consumer data

In the Frollo app this means consumers will get a more complete picture of their finances, as they’re able to view more of their financial products in the app.

Frollo uses this information to help people turn around their finances by giving them a full picture of their finances, providing them with insights and the tools to take action.

The Frollo Open Banking platform

Frollo is leading the charge in Open Banking. Our market leading Open Banking platform helps businesses leverage CDR data to get ahead of the competition.

Get in touch to discuss how we can help you:

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According to the January Business Risk Review, payment times in construction rose by 47 per cent year-on-year in January. On a monthly basis, construction firms are now on average 44 days late paying their bills, versus the December result of 35 days. (more…)

Full Profile's AgriDigital successfully executes world's first settlement of an agricultural commodity on a blockchain

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