ANZ expects the impact of open banking on Australia’s financial industry will be profound. So much so that the bank is preparing to fundamentally change its business model. But it had to rely on regulators to get the conversation started.

“From a large bank perspective, I think open banking helps us validate our conclusion, that I think is broadly held amongst financial institutions, that our business model can’t stand still,” said Nigel Dobson, Banking Services Business Domain Lead, ANZ.

“We can not do what we are doing now, today, for the next five years and hope to be successful. Research backs that up.”

Dobson was speaking on a panel at the Sibos event in Sydney yesterday which included financial industry executives and researchers from Warwick Business School. He said open banking, spurred by a “regulatory tailwind”, had become the catalyst for organisation wide change at ANZ.

Open banking, set to begin in July 2019, is the move to free up consumer banking data allowing customers to more easily compare financial service providers or port their data to other approved service providers. The ACCC led scheme is designed to drive innovation and competition in an industry dominated by large incumbents. Open banking in Australia is also expected to act as a test case for open data in other industries like telecommunications and utilities.

According to Dobson, When consumers have control over their data business model possibilities are “immense” and the shift means ANZ must become more agile and customer focused if it is to capture new revenue streams and models.

The stick is mightier than the carrot

Australia’s largest banks have been criticised for not responding quickly enough to open banking because of fears of customer churn and short term profit loss.

In August, managing director of BGA Digital and Ubank founder, Gerd Schenkel, blasted Australia’s big banks for failing to open up consumer data and relying on regulators to drive open banking innovation.

Nigel Dobson, ANZ Banking Services Business Domain Lead.

But Dobson argues ANZ will indeed move beyond regulatory compliance in open banking.

“Building for compliance, in a regulatory sense, does not seem like a very smart option. We believe that the opportunity has to be one of great ambition, particularly for an organisation like [ANZ], to partner and leverage ideas and capability that we don’t have,” Dobson said.

He added regulators had provided the urgency and transparency needed to begin open banking initiatives.

“It gives us permission within the organisation to rethink our business model,” Dobson said.

“To generate interest and urgency around investing in different ways of interacting with customer and then acknowledging that the Consumer Data Right here in Australia is going to put immense power back into our customers hands in the long run, which of course is the intent [of CDR].”

Managing regulator expectations

While there is some agreement on the level of change ushered in by open banking, Dobson said there was still a misalignment on the pace of change between regulators and the industry. The legacy systems of large banks and their sheer scale meant they would not necessarily be able to match regulators timeline demands, according to Dobson.

“Regulators always want us to move faster and to deliver to the consumer. But because of … the banks architecture and inevitably the devil in the details that emerges in these types of projects, the speed at which we can feasibly move, and responsibly move frankly because we want it to be a good experience for our customers, is a debate.”

Dobson said the current architecture of banks needed to be improved for open banking and culture must also change to focus on customer outcomes.

“I think there’s still a services culture within the banks that needs to emerge to support this kind of regulatory regime and business model,” Dobson said.

“I think our risk as large organisations is that we spend all our time admiring our internal problems without thinking what the customer needs are.”

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