Open banking: rollout with care

However, crucial to these outcomes is implementing lessons learned from recent overseas experiences. 

"Comprehensive data access can maximise the potential for positive consumer outcomes.”

Amongst rushed efforts to meet regulatory obligations and deadlines in the UK, consumer education was neglected and adoption slow. Research from Experian showed it was clear half of Brits surveyed didn’t believe there was any benefit to them in sharing their current account information.

Providing consumers with a solid understanding about who accesses their data (and how) is imperative to build trust in Australia’s system. For consumers to see the real benefits, they will need to give organisations access to some of their most valuable data.

One way the Australian government is aiming to ensure this is with the newly created Consumer Data Rights bill. According to Treasurer Scott Morrison, the new bill will “arm Australians with the right information they need to seek better deals on banking products and loans, with further sectors such as energy and telecommunications services to be added over time.”

A timeline which balances deployment urgency with a comprehensive solution, and facilitates the creation of value-added services is optimal.

How to win

Comprehensive data access can maximise the potential for positive consumer outcomes. By enabling product comparison, greater competition and product invention is encouraged, leading to greater variety of financial products and much more personalised customer experience.

To champion the consumer’s best interests, practical implementation and delivery must be addressed. Robust complaint, remediation and redress processes will be key, and solution providers must deliver full customer support in instances where the new system does not go to plan.

Support systems in the wake of such large-scale change cannot preclude one type of consumer. Open banking in the UK initially prioritised consumers with online bank accounts, as customers had to log into their online account to share data. But this excluded the 8 million people that did not bank online.

Similarly, the solutions should not be restricted to one industry space - opening the market to solutions outside the established banking community, such as in fintechs, can help cater to all end users.

To create appropriate technical, operational, and governance controls in Australia, an industry-led, collaborative approach is vital. The extensive (and arguably unique) experience of credit reporting bodies in large-scale data sharing will be a core influencer.

Local industry participants are already developing secure, operable and compliant technology solutions that support the distribution and use of data between entities – with the current support of the big four in the transition to comprehensive credit reporting a prime example.

How not to win

If data breach risks are high, consumer confidence suffers, and participation in the data sharing process is lost. To protect sensitive or vulnerable transactional data, equal consideration must be awarded to technical efficacy and security of data transfer processes and protocols.

Those that will succeed in an open banking regime will be those that can gain the confidence and trust of their customers. In APAC, Australian consumers are the least likely to share their personal data with businesses. A recent report found 22 per cent of Australian consumers would refrain from doing so, compared to the 19 per cent across APAC.

The Government’s recommendation that participating data recipients should provide equivalent data in response could create wider obligations around data storage and further sharing over time.

Moreover, it discourages participation from potential third parties and smaller technology providers due to significant costs – excluding organisations that could provide value to the system but may not have the data to contribute. A secure platform for exchanging data for specific use cases could be the solution.

The innovative potential that open banking offers is undeniable.

Already, despite slow uptake, over 80 new UK firms have applied for Financial Conduct Authority authorisation in order to build new services overlayed on the public application programming interface.

We are entering a phase of exponential innovation. This should be harnessed and it must be ensured that regulatory change also considers the customer experience.

Organisations which provide transparency and openness in their relationship with consumers are those that will benefit overall.

With broad solution design, the right roadmap and precautions in place, the end-state is one that will truly revolutionise the customer experience in Australia.

Poli Konstantinidis is Executive General Manager, Credit Services & Decision Analytics at Experian ANZ