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A NEW ERA: LAUNCH OF OPEN BANKING PHASE ONE Under open banking, consumers are set to benefit from significant savings, thanks to greater transparency and the ability to secure better deals on financial products. 1 July marked the start of ‘phase one’, so what does that mean for borrowers?
1 July, Australia entered a new era with the launch of the first phase of open banking, which allows personal banking customers to share certain data with trusted third parties. The Consumer Data Right regime, also known as open banking, is intended to give consumers and small businesses greater control over their personal information by allowing banks and fintechs to provide safe and secure access to their data to trusted third parties. With this capability, Australians will be able to make better decisions regarding the products and services they purchase, and can switch between providers more easily. The transition to the new system will challenge existing providers to better look after their customers and will create room for new competitors to enter the market. The ACCC had earlier launched a platform that enables banks and fintechs to apply to become accredited data recipients in order to be able to fully engage in the ON
open banking environment. “The launch of this Consumer Data Right (CDR) platform and portal means businesses of all sizes can take the first steps towards being part of this crucial economic reform,” said ACCC commissioner Sarah Court.
portal where businesses can apply to be accredited but is also crucial to ensuring that consumers’ data is shared exclusively and securely between parties that have been vetted by the ACCC. Although the CDR system was
“This sharing of data is a watershed moment for competition in the banking industry and, in time, will enable every Australian to use their data for their own benefit” Anna Bligh, CEO, Australian Banking Association “We are encouraging businesses wanting to participate in the CDR regime to apply for accreditation and take part in reshaping banking competition in Australia.” The platform, launched at the end of May, not only provides a
introduced on 1 July, Anna Bligh, CEO of the Australian Banking Association, said it would start small but ramp up over time. By the end of 2020, the ACCC anticipates that there will be dozens of companies accredited to help
WHAT IS THE CONSUMER DATA RIGHT (CDR)?
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The CDR gives consumers greater control over their own data, including the ability to securely share data with a trusted third party.
It aims to help consumers monitor their finances, utilities and other services, and compare and switch between different offerings more easily.
The system also aims to encourage innovation and competition between service providers, helping consumers access products and services.
customers get a better deal – and the more accredited companies there are, the greater the competition battling it out for Australian customers who are searching for the best deal, Bligh said. “This sharing of data is a watershed moment for competition in the banking industry and, in time, will enable every Australian to use their data for their own benefit,” Bligh said. “Customers can be assured that they will always be in control of how and when they share their data. This is a great achievement by the major banks. Despite moving the majority of their workforce to work from home and processing unprecedented numbers of customer queries and loan deferrals as a result of COVID-19, the banks have stayed on plan and delivered open banking and ensured the data will start to be shared from today.” Sydney-based purpose-fintech Frollo is one of only two companies that have so far been approved to access the data from the new CDR system as it goes live. With first access, Frollo is in a position to help traditional banks, neobanks, fintechs, lenders and employers get ahead of the competition with its B2B and open banking solutions. The financial management company, which currently has over 100,000 users on its financial wellbeing and budgeting app for consumers, is the only fintech that’s an accredited data recipient (ADR) under CDR rules after it participated in the open banking trial and helped build and test the infrastructure alongside the big four banks. Gareth Gumbley, CEO and founder of Frollo, said that after
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