Open banking regime will empower customers, enhance competition and drive Australian innovation
FinTech Australia today welcomed news that the Australian Government will legislate to empower customers by requiring banks to allow these customers to access their own data.
An open banking regime is key to giving consumers more choice of financial services providers, a greater understanding of their financial standing and overall more control over their financial future, said FinTech Australia chair Stuart Stoyan.
It is also vital to supporting greater fintech innovation which creates increased competition, greater choice, more efficient delivery and lower price of financial services for consumers.
FinTech Australia founding chair and board member Simon Cant said FinTech Australia has been a consistent advocate for policy reform to drive the implementation of an open banking (also known as open financial data) framework in Australia.
From our very first policy reform recommendation paper to Federal Treasury in February 2016, through our three submissions to the Productivity Commissions inquiry into Data Availability and Use and to the current Australian Treasury review, we have continuously advocated that the government mandate the development and implementation of a standardised open banking model, Mr Cant said.
Importantly, we have also advocated that this model also include an accreditation framework for data receivers to ensure consumer confidence in the security of their personal data. We are pleased to see the government has backed this idea.
In articulating a model for achieving both openness and confidence in the security of data Australia has the opportunity to create an open financial data regime which leads the world and therefore leads to strong investment and growth in fintech and financial services.
Mr Stoyan also pointed out that a regulated open data regime would allow fintech firms, and Australias financial services industry, to compete against global tech players.
Without access to the financial data necessary to build, test and deploy innovative fintech solutions in their local market, Australian companies stand little chance of being able to compete on an increasingly global stage against these digital juggernauts. The net outcome of this is that increasing amounts of our tax revenue, and best skilled labour will go offshore, he said.
FinTech Australia will be closely examining the detail of the review report, alongside its members, and lodging a submission.
Mr Stoyan also welcomed news that the government had today released exposure draft legislation to mandate comprehensive credit reporting. The draft legislation will require the major banks to supply 50 per cent of their comprehensive credit reporting data to credit reporting bodies by 1 July 2018, increasing to 100 per cent a year later.
Mr Stoyan said the changes would level the playing field in favour of customers, by ensuring their positive credit history was front and centre when lending decisions were made, and again followed strong advocacy from Australias fintech community.
The governments decision also follows a voluntary move by several members of Australias fintech community, including Ratesetter, MoneyPlace and SocietyOne, to introduce comprehensive credit reporting.
Until now, a number of Australias big banks and lenders have not been sharing the positive data which should allow customers to get better credit, Mr Stoyan said.
The release of exposure draft legislation today is an important step to help consumers get lower interest rates and better access to credit.
This will especially help borrowers with a good credit history who make their repayments on time, rewarding their good behaviour with fairer rates.