As we move into 2019, it seems that the pace of regulatory change within the financial sector is showing no sign of slowing. Australia’s Consumer Data Right (CDR) legislation is likely to be passed this quarter which means that customers will have the right to direct that their data be shared with others they trust, so that they can benefit from its value. Businesses with new ideas have the opportunity to capitalise on this new regulation by creating innovative apps.
Open banking refers to CDR as it applies to the banking sector, the first sector to which this legislation will apply. It creates exciting opportunities for all financial organisations, from multinationals to innovative start-ups and fintechs to develop secure APIs (application programming interfaces) which allow the flow of data between unaffiliated parties and can then be used to create consumer benefit. These apps will have the ability to disrupt current financial networks, connecting people, banks and service providers and making money for everyone in the process.
The Australian Competition and Consumer Commission (ACCC) will launch a pilot scheme on July 1, 2019 with the big 4 banks to test this open banking systems. The banks will be required to share data in relation to all banking products including credit and debit cards, mortgages and savings accounts. Customers will then be able to access this information via a single app and see all their accounts in one place regardless of who their bank is.
“This is an important step towards making the Consumer Data Right a reality. The Consumer Data Right will initially apply to banking data, giving consumers and small businesses the choice to securely share data with trusted third parties,” ACCC Commissioner Sarah Court said.
It is an exciting era as the whole idea of open banking drives competition and innovation and gives consumers more choice and control over their financial decisions. Consumers will be able to use this information to compare household bills, find better mortgages, control direct debits and easily manage income and outgoings.
Last weekend marked one year since the launch of Open Banking in the UK. So far, there has been a slow uptake, where public awareness remains low despite the hype. Fears in relation to security and data protection are behind the slow uptake and it is possible that banks are not proactively addressing the issue as there is little risk of losing clients due to the low rate of bank switching in the UK.
It is said that people in the UK are more likely to get divorced than to change banks. However, in Australia, Nielsen have reported that a massive 2.1 million Australians are looking to change their main financial organisation within the next 6 months, 67% of who are big four bank customers.
The trend towards digital banks and neobanks is also evident in Australia with Nielson suggesting a large proportion of those looking to change banks are eyeing up their digital banking options, with neobanks such as Xinjo and Volt showing significant growth and investment in recent times.
The popular London based neobank Revolut has attracted significant interest from Australians prior to its upcoming launch, with 20,000 Australians already signed up to its the waiting list. What this means is that we will definitely see change. Financial organisations in Australia will have to stop viewing open banking merely as a compliance obligation but an opportunity to improve services and innovation in order to hold on to their current customers and engage new ones.
With this comes opportunities for savvy fintech companies or businesses with a unique idea. Here are some examples of independent third parties who have developed apps for use in the UK market.
This digital revolution offers opportunities for both consumers and businesses to change how they interact with each other, taking the customer experience to a whole new level. The development of these types of apps doesn’t just impact customer experience at a superficial level but digitises the entire customer journey from initial engagement to daily trading.
We have a wealth of experience in building prototypes and applications and can help turn your idea into a reality.
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