Finance is changing in Australia. Find out what open banking is and how it affects you.
What is open banking?
Open banking will give you greater control of the data that banks and other financial institutions currently hold on you. Right now, it's difficult for you to get a hold of your full financial data and for banks to send that data to each and to other companies. This makes it costly, difficult and time-consuming to find the best product or service for you and also to switch to the product or service.
Open banking will allow you to direct your data to be sent to other banks, financial institutions and authorised organisations when you want to. You control who holds your data and how it is used.
Why does open banking matter?
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.
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Which organisations can I send my data to and from?
Authorised deposit-taking institutions will be automatically included in open banking. Other companies able to receive and hold data will need to be "accredited entities that will adhere to appropriate security and privacy standards and have the capacity to provide financial compensation if things go wrong and they are found liable."
To decide organisations that are eligible, a risk-based standard will be applied.
What's an example of how open banking will work?
There are myriad possibilities for open banking. One is for opening a new bank account. Right now, opening a new bank account can be annoying as all of your transaction history will remain with your previous account. While you can save, print off or continue to access this information it cannot be a part of your new account. Under open banking, you will be able to direct your former bank to send all of your transaction account data to your new bank to make switching easier.
How much will open banking cost me?
Open banking will be free for consumers.
Is sharing my financial data safe?
Safety has been the main concern of the open banking debate. 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 also only be able to access your data at your request and do with it what you want.
When is it happening in Australia?
The government has announced that a phased implementation of open banking will begin on 1 July 2019. From this date, the major banks will need to make certain data, including credit card, debit card and transaction account data, available at your request. Mortgage data will become available from 1 February 2020. The non-major banks will be operating at a timeline 12 months behind this.