A path forward on open banking

At its heart, open banking is a data opportunity. And data are what banks do best – using them to solve problems for their customers, both retail and institutional.

"We see open banking as a digital innovation platform for the next decade.” – Richard Hough, ANZ’s Lead for Open Banking.

While most of the focus on open banking has been at the consumer end, all parts of the financial services value chain needed to be connected for “any network effect to really take hold,” according to Lisa Vasic, ANZ’s Managing Director of Transaction Banking.

“From an institutional perspective, we see open banking not just as a data interoperability framework but as a data framework which enables our customers… to consume data in a way that helps makes their end customer-value proposition more responsive to digital consumption,” Vasic says on an ANZ Institutional Insights podcast as part of a series of conversations in the lead up the annual Sibos financial services conference next month.

She adds ANZ has a key role educating its institutional customers on open banking and broader data usage.

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“It doesn't have to be an open-banking construct for [banks like ANZ] to be able to share data. We've been doing that from time immemorial,” she says. “It's really around making sure we compartmentalise data to solve specific [customer] opportunities and problems.

“There's almost a parallel run happening with our institutional customers – one which is, how are APIs allowing them to consume bite-sized pieces of data, particularly as they're responding to real-time opportunities in their customer set?”

Meanwhile Vasic adds “there's a consumer-led one - which is the open banking framework - with the rights that sit around the sharing of [anonymised] consumer data to drive our institutional customers to build better propositions to meet customer demand.”

Next year will be critical for open banking as the financial services sector further leverages data the system provides for customer propositions, according to Richard Hough, ANZ’s Insights Initiative Lead for Open Banking.

“We see open banking as a digital innovation platform for the next decade,” he says, noting the supply of consumer data has been slowly building in the local industry since open banking began.

“That’s really getting to the point only now where it's going to be very interesting for data recipients to utilise. Because the full supply of data from major banks and other banks is now in place.

“We're going to see… in the next 12 months an increasing range of data recipients looking to consume that data, to give new customer propositions.”

Customer propositions

But for Hough, open banking does not immediately translate into a new set of services or products rather “it's just a way of augmenting the capabilities we already have.”

Vasic said open banking provides a “co-creative” opportunity for the bank and its institutional customers.

“The first thing we've got to think about is actually what is the problem we're trying to solve for our customers? It’s around working with our customers to say, what is the opportunity here?”

Hough says it’s clear institutional customers are “increasingly looking for a strong partner” around open banking “rather than just a banking provider”.

“One thing is the technology,” Vasic says. “But the most important thing is how to leverage the technology… to bring things to life.”

More than 40 per cent of ANZ’s institutional customer base in Australia already uses house-to-house data-transfer mechanisms.

“Now the use cases for that are often quite different from what we would expect for the concepts that are around open banking, which will be much more API enabled,” she says. “It just goes to show customers really understand the need to be able to consume data - but also be able to compartmentalise it to be able to evolve those customer value propositions.”

Vasic and Hough also touched on the critical nature of security when dealing with data and the key themes set to dominate the agenda at Sibos in October. Listen to the podcast above to find out more.

This article was originally published in ANZ’s Institutional Insights page.

Shane White is an editor with ANZ Institutional Insights.