Open Banking ramped up in Australia this month with the inclusion of  consumer data held by the big four banks, the first phase to involve actual consumers’ data. The industry has warned, however, uptake by consumers will take years more and uncertainty about the rules is holding back the new data portability scheme.

Frollo, a financial management software company and accredited data recipient participating in open banking, asked 161 industry representatives from across banking, lending, fintech, broking, technology providers and consultancies for their views on open banking

The results suggest awareness of the scheme is low for consumers and even mixed for the industry – more than 40 per cent indicated they are only somewhat familiar or less so with open banking, which has already begun.

Most of the local finance industry say they intend to use open banking, however, and 45 per cent plan to do so within the next 12 months. The flow on to consumers, though, will take many more years, they say.

Most respondents indicated it will take between 3 and 5 years before the majority of Australians will have used Open Banking. But customer outcomes is how they will judge their investment

Source: Frollo, The State of Open Banking in Australia.

According to the survey, Customer satisfaction (65 per cent) acquisition (58 per cent) and retention (49 per cent) were the main drivers, followed by meeting compliance requirements (44 per cent), operational savings (37 per cent) and branding (33 per cent).

Rules resistance

Asked about the biggest challenge to completing their Consumer Data Right objectives, the industry warned of complexity and clarity of rules (54 per cent)m customer education (50 per cent) and compliance (46 per cent).

“The majority of respondents believe the uncertainty about the rules and customer education are considered to be the most important challenges in making CDR a success,” said Frollo CEO and founder, Gareth Gumbley.

“We know that change at this scale doesn’t happen at the flick of a switch, but as it stands there is too much ambiguity. The rules aren’t clear and for many it’s perceived as a mountain too big to climb. There’s a difference between consultation and collaboration. Now is the time for the regulator to invest in a simpler and more flexible framework to speed up adoption, or empower banks and fintechs to innovate and get on with it for the benefit of everyone else who will follow,”

An outline of CDR rules has been available since 2018, with updates for specific sectors over the last two years. A lockdown version of the rules were published in September 2019. The regulator has since made changes based on industry feedback including amendments last month to allow intermediary data collectors, thereby lowering some of the barriers to smaller participants.

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