Australia’s big four welcomes start of open banking

via FinTech Futures

Australia’s big four banks – ANZ, NAB, Westpac and Commonwealth Bank – have taken their first step in open banking.

Retail customers which bank with either of the four can give permission for their data to be leveraged by approved third parties.

The data relates to credit and debit cards, as well as deposit accounts and transaction accounts.

Open banking in Australia

Australia’s competition watchdog finalised the rules governing Consumer Data Right regulations in February 2020.

The rules legally required the country’s four major banks to share product reference data with accredited data recipients as of 1 July 2020.

The rules, initially planned to gather legal force in February, were postponed to July due to concerns over testing and security of the new provisions for account data sharing.

From 1 November 2020, consumer data relating to mortgages and personal loans must be shared by the big four.

Potential adoption figures

Collectively, all four banks have around 43.87 million retail customers. However, it is likely that there will be a smaller number of customers using the new digital channels.

In recent years, these banks have tried to drive up digital account usage. Commonwealth Bank said last August that seven million of its retail customers – out of 16 million – were banking on digital channels.

Of those customers, 5.6 million were using the bank’s app at least once a month.

ANZ saw relatively slow digital growth in 2019. It had 3.6 million “digitally active” customers, versus 3.5 million in 2018 – just a 1% increase. That is out of 5.87 million customers.

It is likely that the advent of open banking in Australia will help to boost these numbers.

Investments in digital

The banks have been investing in new technologies to further drive digital adoption. In 2018, technology-related projects cost Westpac $800 million, delivering savings of $304 million.

NAB has adopted a cloud-first strategy and works closely with Microsoft utilising its Azure platform.

NAB also made its 40,000 staff develop their data and digital skills during lockdown.

“We’ve invested heavily in our technology foundations and in our people to build a great customer experience that has been focused on ensuring the safety and security of customer information,” says NAB’s personal banking group executive, Rachel Slade.

“We’re continuing to prepare for future phases that will allow our customers to share more of their data, should they choose to do so,” she adds.