The CEO of Australian fintech Tic:Toc says his business is ready for open banking and the local industry will benefit from becoming one of the first places in the world to embrace the data sharing rules.

The first phase of Australia’s open banking regime began on July 1, with three of the four major banks voluntarily sharing generic product data as part of the federal government’s pilot program. Westpac noted it was the first time the bank had shared data by APIs.

The next phase of open banking, scheduled for February 2020, will require banks to make their customers’ data available by APIs to trusted third parties. But sticking to that timeline depends on passing the Customer Data Right (CDR) bill, which is set to be introduced in parliament this week.

According to the government, the ACCC will issue the ‘lock-down’ version of the rules governing the system by the end of August and in the last week the interim Data Standards Body has issued the implementation draft of the technical standards.

Anthony Baum, CEO, Tic:Toc

Tic:Toc CEO Anthony Baum told Which-50 it would be “disappointing” if the current timeline was pushed back, arguing Australia has an incentive to be an early adopter of open banking, which is being embraced by regulators around the world.

“Open banking is something that is currently under consideration in virtually every jurisdiction in the world. So this is not an Australian phenomena,” Baum told Which-50.

“It is in Australia’s interest to implement our open banking regime as fast and as holistically as possible.”

Baum argues the first fintechs that can leverage open banking to create new customer propositions and services will have an advantage over other markets.

“If we go fast we will have a great opportunity as a country to develop a whole series of fantastic fintech businesses,” he said.

Baum says Tic:Toc is effectively operating as the open banking exists already and a delay in passing the legislation won’t have a large impact on its operations.

Once open banking comes into effect for the broader market, Tic:Toc will transition the technology approach it uses to validate customers’ financial position when determining if they are a good bet for a home loan.

Currently, the fintech uses aggregation methods and optical character recognition (OCR) to digitise data that is then run through its automated platform to perform the validation and assessment process.

Under open banking that data would instead be fed into the platform via APIs and banks would be required to invest in the delivery mechanisms to share their customer data.

“The primary advantage of [the open banking approach] is that it’s done with a framework that doesn’t rely on an aggregator collecting that data through customer consent and then passing it to us. It actually occurs directly from a mandated legal obligation of the bank to provide that data through that API to the user.”

“The whole point of open banking is that it provides a mandated expectation that data is available for exactly that type of diligent purpose and for creating better customer products.”

Tic:Toc receives between $200 to $250 million dollars a month in submitted home loan applications. After launching its direct business in 2017 to test its technology, the business is now working on licencing its platform to banks. The first customer was Bendigo & Adelaide Bank, a shareholder in Tic:Toc, which used the whitelabelled technology to deliver its Bendigo Express loans.

Customer Data Right

The Australian Banking Association welcomed the introduction of legislation for the Consumer Data Right, saying it is an important step to making the open banking reforms a reality for Australian bank customers.

Open banking will allow customers, at their request, to share their personal information with accredited institutions, including other banks, to allow them to find a better deal on their banking products. The open banking regime will begin next year for the four major banks, with other Australian banks to join the system following this.

Executive Director of Policy for the Australian Banking Association Christine Cupitt said the legislation was a critical step to ensure the reforms moved forward and ensured that the system was safe and secure for Australians to use when launched next year.

“Open banking will be a win for customers, increasing competition and making it easier to get the best deal possible from their bank,” Cupitt said.

“Thorough testing of this regime is vitally important to the success of this reform and to ensure Australians trust and use it.

“Passing this legislation is an important step to setting up a safe and secure system,” she said.

The consumer data right will be first applied to the banking sector, followed by the energy sector and with the telecommunications sector proposed to follow.

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