Open banking is starting and it's going to give you more control over what information banks hold about you. With open banking, it is going to be easier to find better deals, get your financial information from your bank and to switch products.
This guide will explain exactly what open banking is, how it's going to work, whether it's safe and what you can do with it.
What is open banking?
Open banking gives you control of the data banks and financial institutions hold on you. It can be difficult to get your full financial data and for banks to send that data to each other and to other companies. This makes it tricky to for you find the best product or service and to switch to new products and services.
Open banking allows you to ask that your data be sent to other banks, financial institutions and authorised organisations when you want it to. You control who holds your data and how it is used.
What is the Consumer Data Right?
The Consumer Data Right (CDR) is what gives you, a consumer, the right to choose to share data that provider's hold on you. This could be financial data such as what banks hold or data held on your by your energy provider. CDR gives you the right to share your data between providers to be able to easily switch providers, compare products and take advantage of new products and services. The CDR will be introduced in the financial sector first with open banking and it will be then be introduced into the energy sector.
What's an example of how open banking will work in Australia?
There are a lot of possibilities for open banking. One is signing up for a new product. Right now, it's easier to sign up for a product such as a loan or credit card with your current bank because it has all of your transaction history and identification documents in its system. With open banking, you will be able to direct your bank to send that information to any bank or lender so that signing up for a new product will be just as easy anywhere.
Another example is budgeting apps and tools. With open banking, you will be able to direct your banking data to be fed into a budgeting app so it can help you manage your money. Budgeting apps can help you categorise your money automatically, track and optimise your savings and more. Apps such as Money Dashboard, Yolt and Cleo have proved popular in the UK since the launch of open banking.
The Finder app is another example. The Finder app the app monitors your transactions and regular expenses, doing the hard work for you to find better deals in the market. The app helps you use your own banking data to save money.
Get the free Finder app
What will I be able to request from my bank?
There are a few different types of data included in open banking. All of this data will become available to be securely requested from your bank under open banking but become available at different times. This includes data from:
- Transaction accounts, deposit accounts, credit cards and debit cards. From 1 July 2020 you can request your data from these types of accounts if it is held with one of the Big Four banks. Other banks will have this data available from February 2021.
- Home loans, investment loans, personal loans and joint accounts. You will be able to request this data from your bank from 1 November 2020.
Who can I send my data to and from?
Authorised deposit-taking institutions (banks) will be automatically included in open banking. Other companies able to receive and hold data will need to be authorised in order to accept and hold data through open banking. A handful of companies have been authorised to participate in open banking including Frollo, a personal finance and budget app, and Regional Australia Bank. You can find out where you can use open banking in our guide.
How is my data shared under open banking?
You can securely share your data using open banking in about two minutes. Here is the step-by-step process:
- Give consent. You will need to give permission for the provider to access your data.
- Identity check. Your identity will be verified.
- Confirm data. You'll be securely sent to your bank to confirm the data you want to share. You can see and manage the data you've consented to share and can withdraw this consent at any time.
- Data is shared. The data you have requested to be shared is securely transferred in a machine-readable format.
- You can start using the service. You'll be able to start using the app or website you want to use with your personal data.
How much will open banking cost me?
Open banking in Australia will be free.
When does open banking start in Australia?
Open banking officially started on 1 July 2020. From this date, the Big Four banks (CommBank, NAB, Westpac and ANZ) were required to make your data available to you if you request it.
Data which will be included in the first phase of open banking from 1 July 2020 will include credit and debit card, deposit and transaction data. Mortgage and personal loan data will follow on 1 November 2020. Banks other than the Big Four will need to provide access to open banking data over the next 12 months to July 2021.
Australia's open banking timeline
Is sharing my financial data safe?
Yes, sharing your data is secure. Open banking is a government initiative and only accredited data recipients can take part in open banking. Financial institutions and other companies that participate in open banking will need to adhere to strict security standards when accessing and storing your data and will be subject to the privacy act. These organisations will only be able to access data at your request.
Australia's CDR initiative is regulated by the Australian Competition and Consumer Commission (ACCC) and the Office of the Australian Information Commissioner (OAIC). CSIRO's Data Standards Body has established the process for sharing CDR data. The data transfer process uses application programming interfaces (APIs) to transfer your data securely.
Is Australia the only country to do it?
No. The UK has mandated open banking, with the sharing of customer and transaction data via open APIs having been in operation since 1 January 2018. The European Union has also mandated open banking, with payment initiation and account data retrieval by third parties having come in effect in May 2018.
Various other countries, including the US and Singapore, are taking steps towards open banking, data sharing and open APIs.
Why does open banking matter?
Open banking puts you back in control of your data. It will allow you to tell banks to transfer your data to other banks or companies in order to compare products or sign up for new products more easily.
Having better access to your data will allow you to make better and more informed choices about the financial products that are right for you. It will also drive competition within the financial services sector, promoting innovation and allowing new and better products and services to be developed.
Looking to chat with our team about open banking?
Book a meeting
Banking in the Finder app
See your savings, super, shares and loans side-by-side in the Finder app. We'll also track your spending and hunt down better ways for you to save. Pop in your phone number below to get your download link.