Consumer choice key to financial open data revolution, policy roundtable hears
Greater consumer choice and a stronger Australian financial services industry will flow from proposed reforms to make it easier for customers to access their data, a major policy roundtable has heard.
More than 30 people attended the Open Data Roundtable, which was hosted by the Victorian Government in conjunction with FinTech Australia and FinTech Victoria in Melbourne on 15 February.
The roundtable allowed senior representatives from government and industry to discuss in a Chatham House rules-type session the key policy and operational issues relating to the current debate over opening-up financial data.
Attendees included representatives from the Australian Securities and Investments Commission (ASIC), Australian Federal Treasury, local and international banks, fintech companies, superannuation funds and insurance and legal firms.
The Productivity Commission has been holding a public inquiry into the benefits and costs of making public and private datasets more available, including examining options for the collection, sharing and release of data. A final report is expected in March.
The Commissions draft report issued in November last year proposed the creation of a comprehensive right to data. This would give people the right to seamlessly access their data, say from their bank account, and direct that it be sent to another party, such as an innovative fintech firm or insurance company.
Key discussion themes at last weeks roundtable included that:
Consumer choice and empowerment should be at the centre of the open data debate and there is a need to educate consumers about the benefits of open data reform
Other countries, such as Japan and the United Kingdom, are moving more quickly than Australia to set up regulatory frameworks, and there is already strong financial community support in these markets for the sharing of customer data
Large international financial institutions are also moving more quickly than Australian institutions to implement data sharing controls via technologies such as application programming interfaces (APIs)
Cross-industry participation is key to developing governance mechanisms, standards and defining the scope of data to be released (and at what price)
Existing financial institutions have much to gain from creating APIs to share customer data, including the ability to collaborate with innovative companies to test new solutions more quickly and also to improve understanding of their customers behaviour.
Speaking to the event, FinTech Australia CEO Danielle Szetho said: Consumers, including businesses, should have the right to direct institutions to share their information with third parties. This will help consumers to better understand their financial position, compare different products and access deals better tailored to their needs.
The world of finance is changing rapidly, with an amazing world of choice awaiting consumers in fintech areas such as automated online financial advice, tailored personal and small business lending and micro-amount deposits and payments.
We need ongoing industry engagement to co-design workable standards and governance for the development of safe and easy-to-use online solutions to allow consumers and third-party companies they authorise to seamlessly access their data.
By doing this, we can all help meet consumer needs and help create a more internationally competitive and stronger Australian fintech and financial services industry.
Ross Sharrott, Founder and Chief Technology Officer of Moneytree (a fintech company which was founded in Japan in 2012), provided the roundtable with an overview of the open data landscape in Japan.
He said banks and customers in Japan were keen to use the companys technology to create new consumer experiences – including being able to better visualise and understand their financial situation – and to improve existing products.
Consumers dont say I want to be a custodian of my data, they instead say things like I want to do my tax return and want it to be automatically populated with my financial information so I dont have to do it, he said.
Luke Howes, CEO of Adelaide-based fintech company Proviso (which helps customers more easily access their data) said: Consumers want their financial services data experience to be effortless. It also needs to be information-rich to provide real solutions and make dealing with finance easier. Overall, we find that customers want to control and better use their own data.
Ernst & Young Australia Fintech Advisory Partner Meredith Angwin, who facilitated the roundtable, said: From EYs experience in other countries such as the UK, we have seen that direct and constructive dialogue between all players in the financial services eco-system including incumbent banks and financial institutions, fintechs and regulators is an important first step in progressing towards a more open financial services sector.
FinTech Victoria interim CEO Alan Tsen thanked the Victorian Government for its leadership in hosting the forum.
The Victorian Government clearly understands the potential economic and consumer benefits from liberating our financial services data and therefore should be congratulated for taking the lead on this event, he said.
About the FinTech Australia position on open financial data
FinTech Australia has proposed that:
- The ePayments code be urgently changed to explicitly legitimise existing companies seeking to collect bank account data (with customer consent) on behalf of third parties
- Given its importance to the economy and consumers, legislation is drafted to mandate the implementation of the proposed comprehensive right to direct data sharing with consumers within a specific timeframe
- If the current voluntary comprehensive credit reporting scheme fails to meet set data collection targets by mid-2017, the Australian Government steps in and mandates the scheme. This will ensure more positive credit history is collected and shared about companies and individuals to help them access loan opportunities
- A cross-industry working group should be created to determine minimum data security standards and common data formats, to create an agreed and understood level playing field for all industry players
- ASIC oversees and accredit third-party companies who access customers financial data, to provide important security safeguards and customer peace-of-mind.
The two FinTech Australia submissions to the Productivity Commission are available here and here.