Based on the recommendations of a review into open banking released last week, Australia’s big four banks could be in for a significant test of their speed and agility.
The final report into Australia’s proposed open banking regime has been published including a recommended timing for the implementation of the regime.
Following the government’s final decision on open baking, Australia’s big four banks should have just 12 months to begin the regime, according to the review, led by KWM partner, Scott Farrell.
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It’s a significantly shorter period than many were expecting and could prove challenging for the banks. Banks would be required to develop systems to facilitate the transfer of customer data to approved third parties via APIs.
In an open banking deep dive last year, Managing Director, BGA Digital and founder of UBank, Gerd Schenkel, told Which-50 incumbent banks would likely be requesting a two to three year period to implement the regime.
“There will be political will to implement these measures but then there’ll be a reasonable ask for time to implement the technical requirements,” Schenkel said in December.
A statement from the Australian Bankers’ Association said the report “lays out a broadly sensible path to open banking” but the ABA has “some concerns surrounding the implementation.”
“A reform as large as open banking must be carefully considered and properly implemented,” the statement said.
Banks had recommended open banking be phased in over several years in their review submissions.
- Read More: Cover Story – Opening Up Open Banking
A Westpac company spokesperson told Which-50, “Westpac is supportive of enhanced data sharing in banking which will support customer choice and competition, and complement an economy-wide open data regime.”
“We welcomed the opportunity to engage with the Farrell Review and we are considering the contents of the review in full.”
Open Banking – A test case for data control
The final report recommended a robust consumer-focused approach to open banking as part of the Consumer Data Right – legislation intended to ensure greater consumer control of banking, energy, phone and internet transactional data.
Open banking in Australia should also be efficient, fair, promote competition, and encourage innovation, according to the review.
UNSW Business School Senior lecturer and open banking advocate, Dr Rob Nicholls, welcomed the report and its recommendations, saying it was an important step towards improving consumer access to their data.
“I’m particularly pleased that the report does not just address banking, but also points to the use of open data by all supplies that consumers ‘touch’ on a regular basis,” Nicholls told Which-50.
“There is a good prospect that the regime will deliver open banking as well as open x, where “x” is any high consumer contact supply such as energy and telecommunications.”