On 9 May 2018, the Australian Government confirmed their decision to establish an Australian Open Banking regime and implement the recommendations set out in the Farrell Report titled “Review into Open Banking in Australia”. This follows the Government’s report into Open Banking released in February 2018 which broadly supported the creation of a new data-sharing regime in the financial services industry. The Australian Government has set aside roughly $45 million over four years to develop the creation of a Consumer Data Right which includes the establishment of the Open Banking framework.
The UK All Party Parliamentary Group (APPG) on FinTech and APPG on Alternative Lending will be hosting an invite-only roundtable on Open Banking, taking place on 31 January from 9:00-10.30am at the Houses of Parliament.
Open Banking went live in the UK on 13 January. From this date, the high street banks were required to make their customers’ bank transaction data available to third party businesses when instructed to do so by the customer. This is the first major milestone in a multi-year programme to open all payment products to the market for financial services. Over time, it is expected to revolutionise the way consumers and small businesses use and access financial services.
Open Banking was the main remedy mandated by the UK Competition and Markets Authority (CMA) following its investigation into the supply of personal current accounts and banking services in 2016. The CMA concluded that UK banks do not compete hard enough for customers’ business; and that technology should be employed to enable customers to compare and access better deals from new providers.
The Roundtable will be an opportunity to hear the latest from the Trustee of Open Banking, Imran Gulamhuseinwala, two weeks after the new services went live; and to raise any concerns about the potential for consumer detriment. You can register your interest here.
As one year has drawn to a close it is time to look forward to 2018 and our tips for the most important 5 regulatory changes for the FinTech industry in Australia.
- Increased access to bank data.
The Government has announced its intention to introduce an open banking regime in Australia under which customers will have the ability to give third parties such as FinTechs access to the customer’s banking data. Treasury is currently conducting a review into open banking models, with the report which was due at the end 2017 yet to be released.
Also planned to come in to effect by 1 July 2018 is mandatory comprehensive credit reporting which will give lenders access to deeper and richer sets of data on consumers to base their credit decisions on. Comprehensive credit reporting is currently voluntary.
By Cameron Abbott and Harry Crawford
With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:
- Artificial intelligence and machine learning
- Open banking
- Cybersecurity and biometrics
- Commercial banking innovation
The Australian Government has announced its intention to mandate that ADIs provide open access to customer and small business data with a commencement date still to be determined. Treasury has been tasked with undertaking a review of the proposals put forward by the Productivity Commission, and is due to report back to the Government by the end of 2017 as to its recommendations on implementation of the proposals and recommended timeframe.
While everyone is excited about the benefits that will flow from open banking, there have been concerns raised about the security and privacy risks raised by an open banking regime. In relation to privacy, the Productivity Commission has suggested that the solution is to amend the existing Privacy Act to include a new class of protected information known as “consumer data”. However there are significant gaps in the existing Privacy Act that would pose real problems in connection with the protection of customer data. For instance, the Australian Privacy Principles do not apply to small businesses with turnover of less than $3.0m and this may exempt many FinTech players from any privacy obligations.
The Australian Treasury has announced an independent review into open banking in Australia. Open banking will require banks to share product and customer data with customers and third parties with the consent of the customer. The Government previously announced that the open banking regime would be introduced in 2018 to help customers seek more suitable products and increase competition.
The Dutch multinational banking and financial services corporation, ING, is returning to the UK by launching a mobile app to help customers manage their money across multiple accounts. Last week ING unveiled Yolt, an app that aggregates data from accounts at different financial institutions, with their customers’ approval. As ING does not provide loans or take deposits in the UK, its new app will only include information on accounts held at other banks and credit card companies. It is one of the UK’s first examples of a bank providing a platform for customers to manage money held by rivals.
The UK Competition and Markets Authority called in August 2016 for high-street banks to adopt a digital standard called “open banking” by 2018. This will allow customers, if they agree, to have their account details and transaction history shared with third parties. For more details on the CMA report, click here.