Australia’s Open Banking regime will quickly move from a compliance issue to a new way of doing business, according to Theo Albers, managing director of Infosys Finacle Australia.
But Albers, whose company overhauls banking platforms with products that together serve nearly half a billion consumers globally, warns most of Australia’s established banks don’t have the technical capabilities to take advantage of the opportunity.
Open Banking mandates that banks share customer data, if the customer chooses, in a machine readable way. It is expected the data portability of a mature open banking scheme will make switching banks much easier and encourage banks and third party providers to develop new financial service based on the newly freed data.
“To be prepared to take advantage of the opportunities that an open banking ecosystem will create, at the very minimum banks will need to ensure they have a modern, proven truly digital platform on powering their operations,” Albers tells Which-50.
“Most of the [established] banks in these segments in Australia are saddled with legacy banking platforms, which impair the banks’ ability to stay relevant to their customers in a fast changing, digitally disrupted world and they would do well to fast-track their readiness.”
Open Banking is currently being trialled by Australia’s largest banks and is scheduled to begin in full in February next year. Albers says the scheme will produce a fundamental change in Australia’s banking sector.
“Customers will be able to choose and shift from ‘Best Banks’ to ‘Best Products and Services’. It will thus open the field both banking and non-banking players to leverage this data and deliver different kinds of services to these customers – both in competition and collaboration with the banks.”
According to Albers there is even potential for an Amazon like marketplace of financial products and services. And consumers experience with those sort of platforms in other areas should drive adoption — currently a concern following sluggish uptake in other jurisdictions.
“Typical business models will be built around banking marketplaces, specialist banking product manufacturers, and Amazon style multi-need platforms. For Australian customers, this will be an extension of their experience on ecommerce platforms such as Amazon and mobile apps, making the learning curve quite sharp.”
Who wins in Open Banking?
While incumbents can also take advantage of the newly freed data and potentially improve their own offerings, Albers says data flow will help level the playing field for smaller stakeholders in particular.
“For smaller players such as community banks and credit unions and new banking players such as fintechs and neobanks, Open Banking will help create a level competitive playing-field to some extent and allow them to provide specialised offerings that transform the way in which customers can save, pay, borrow, invest or manage their finances.”
Overall, the entire industry and consumers will benefit from the shift to Open Banking, Albers said.
Preparing Australian Military Bank
Last year, Infosys Finacle overhauled Australian Military Bank’s core systems into a complete digital stack. While not specifically done for open banking, the platform based, SaaS approach has put the bank in good stead for when data sharing becomes a necessity, Albers said.
“AMB chose a SaaS model, accelerated deployment of an integrated digital banking platform with Infosys Finacle. These implementations have been crucial in readying AMB and today, AMB is in a position to offer banking-as-a-service to digital age players seeking to take advantage of open banking to provide niche financial services.”
One year on from the overhaul, AMB said the Infosys Finacle system based on open APIs had enabled the bank to work effectively with multiple ecosystem partners.
The upgrade has not been without controversy, however. Infosys Australia is facing legal action from former customer, Qudos Bank which contends its intellectual property and confidential information was used by Infosys to develop software for AMB.
In May, the Federal Court ordered Infosys to produce hand over more documents after finding “common elements within the structure” of the AMB and Qudos codes.