Much of the focus of the July 1 open banking kick-off was on the big four banks, however, some of the new types of financial services we expect open banking to deliver were already beginning to emerge.
Innovation is coming from beyond the incumbents, from the emerging set of neo banks and other fintechs which are gradually building their footprint in Australia, and they hope over time, genuine scale.
On this week’s one year anniversary of 86 400 receiving its full banking licence, we asked CEO Robert Bell to describe the impact of open banking on consumers, and on businesses like his.
“We think fundamentally open banking is about giving Australians control of their data. The big four banks have always used data as a way of thinking about how do I sell a customer more products and how do I use these data to find the right customer to flog them another product.”
Bell told Which-50, “We’ve turned that on its head, and we ask, ‘how do we use data to help customers take control of their money? What benefit can we give our customers from using their own data?’ ”
These are the kinds services the neobank chief says his company offered even before open banking finally arrived.
“We’ve already been doing that.” He gives as examples Energy Switch whuch makes it easy for consumers to find and sign with the cheapest energy providers and Connected Accounts which let’s them get a more complete view of all their banking products.
“These are all open banking like services that we’ve been able to achieve before open banking.”
Despite this, Bell says that he and his team are a big believer in open banking.
“We spent the best part of nine months in the testing group for open banking. And we think it will change things over the long term. But the challenge with open banking on day one when it launched, of course, is that you’ve got a very small group of banks providing data, and the subset of data, they’re providing is limited.”
He said the data provided by one of his partners – Yodlee – is much richer than 86 400 can via open banking at the moment.
“That will change over time, and we will agitate and lobby for that.”
Neobank, of course, aren’t the only players in the burgeoning fintech. There are plenty of insurgents looking to provide better financial services and experience for customers, and who plan on chipping away at the revenue of incumbents.
Some of those are competitors and some are potential partners for the emerging class of digital-only banks.
The trick is knowing which is which.
According to Bell, “We spend a lot of time on those choices and we work with over 40 different technology companies to bring together 86 400. We only invest ourselves, in terms of our own team of developers, on things that we can add value.” so our core banking, for example, we don’t develop ourselves.”
For example, 86 400 relies on Data Action for core banking
“It’s a ledger at the end of the day, it’s very stable and well known. It works and calculates interest, the way you want it to do, whereas our customer experience engine which is the layer that sits between the core banking system and the app in the middle, that’s our technology. That’s where we’ve got over 5 million lines of proprietary code.”
By focusing its attention here, the bank is able to deliver very different experiences, says Bell, “So that’s where we spend our money and our time.”
“And then for other things, also we partner. So if someone can do digital ID better than us, for example, then we’ll use them. If someone can do device finding and security better than us, they will use them. We don’t want to try and reinvent everything, but because we’re small we’re able to partner with smaller, more agile technology companies to introduce new things quicker.”
Bell says 86 400 also has a modular design so if, for instance, new digital ID providers come along, they can quickly switch the old provider out.
“That gives us great ability to stay at the front of what’s happening, and stay really efficient as well,” he says.