Fintechs are ready and waiting for Australia’s open banking framework
The Consumer Data Right bill has been introduced to parliament.
The national association for Australia's fintech startup community FinTech Australia, as well as its members, have welcomed the progress of Australia's Consumer Data Right bill. The bill was introduced to parliament by Federal Treasurer Josh Frydenberg and gives Australians control over the use of their data and the right to direct their data to be shared. It lays the framework for open banking in Australia, due to start by 1 February 2020.
Frydenberg described the bill as a "game changer".
"The consumer data right is a fundamental structural reform that will drive competition and improve the flow of information around the Australian economy," he said.
The Consumer Data Right bill, as well as its first iteration, open banking, will put Australian fintech companies in a position to be able to develop products and services to benefit consumers. FinTech Australia general manager Rebecca Schot-Guppy said Australia's fintechs are ready for open banking and encouraged an environment for its introduction that benefits consumers.
"We encourage the Opposition and minor parties to support the reforms so the fintech sector can work to develop products that create competition and benefit consumers," she said.
"We continue to work with the government to ensure the reform can be leveraged by fintechs as soon as it's introduced. We want to avoid a situation where the law comes parcelled with so much red tape that it actually deters innovation."
Open banking will allow consumers to send their transactional data to select institutions in order to find better deals, switch products easier and more. Chief strategy officer of buy now pay later provider Zip also said that it's clear consumers need to take charge of their data to ensure they are getting a fair deal following the royal commission.
"Similarly, it's apparent that new technologies enabled via the CDR will play a critical role in the financial services response to the areas of misconduct revealed, particularly with regards to responsible lending."
Frydenberg said that the introduction of open banking said improved access to data would enable the development of new, better and more convenient products and services.
"For small and medium businesses, it will allow for more effective budgeting tools that can deal with data in real time and help them manage their cash flow and working capital more effectively than they can do today," Frydenberg said.
Better access to data can lead to better lending decisions and access to credit, according to joint CEO of fintech business lender Prospa, Beau Bertoli.
"Open Banking will help us lend to more small businesses by empowering business owners to use their own data and get a better deal," said Bertoli. "It will increase product choice and enable further product innovation by both non-banks and banks."
Bertoli added that this will have a positive flow-on effect to the Australian economy.
"It's proven that funding small businesses stimulates the economy and creates jobs. We've recently been able to quantify that every $1m Prospa lends to small businesses creates 53 jobs and $4m in Australian GDP through research by The CIE and RFi Group."