Open banking in Australia
Finance is changing in Australia. Find out what open banking is and how it affects you.
Open banking has started in Australia. It will give you control over your banking data, making it easier to switch products and find better deals. Here is what you need to know about the new data rules.
What is open banking?
Open banking is going to give you control of the data banks and financial institutions 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 other and to other companies. This makes it tricky to find the best product or service for you and also to switch to new products and services.
Open banking will allow you to ask that your data 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.
When does open banking start in Australia?
Open banking has already started. Australia's Big Four banks (CommBank, NAB, Westpac and ANZ) were asked to make certain financial data available for beta testing when the open banking legislation passed through Parliament, which happened on 1 August 2019. Product data for credit and debit cards, deposit accounts and transaction accounts are currently available through application programming interfaces (APIs).
When will I be able to access my financial data?
From February 2020 the Big Four banks are required to provide access to consumer, account and transaction data to credit and debit cards, deposit accounts and transaction accounts. If you bank with any of the Big Four banks you will be able to request your data or ask it to be sent to a third-party company, as long as it's an accredited data recipient.
The timeline is different for access to other financial data or if you bank with institutions outside of the Big Four. You can see the open banking timeline below for more information.
What types of bank data will be available under open banking?
There are four types of information that will available under open banking:
- Product data. Information about rates, fees and features for each bank's products. This data can be accessed through publicly accessible APIs.
- Customer data. Personal information about you such as your phone number, email address and home address.
- Account data. This includes information about specific accounts such as balances, direct debits and regular repayments.
- Transaction data. Transaction data is information about the transactions on your account, including how much you spent and where you made the transaction.
Which organisations 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. This is so they adhere to the security standards set by the government.
How much will open banking cost me?
Open banking in Australia will be free.
What's an example of how open banking will work in Australia?
There are myriad 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.
Australia's open banking timeline
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 what you want with it.
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.
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Latest news in open banking
Another open banking delay was announced last week. Read more…
The first key deadline has been pushed back to 1 July 2020. Read more…
The government's fintech and regtech inquiry lead puts it back on the industry. Read more…
Australia's biggest bank has told the fintech community the idea the Big Four are dragging their heels on open banking is simply not true. Read more…
Financial services director Mary McHale takes us through how technology is changing our payment options. Read more…
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