The Treasury has released the Report of the Review into Open Banking (Report), making recommendations on the most appropriate model for implementing Open Banking in Australia. The Report contemplates a layered regulatory approach (see previous article for further analysis) to ensure that the system is customer-focused, promotes competition, encourages innovation and is efficient and fair.
Open Banking is likely to significantly impact the financial services sector by affecting how consumers interact with the existing banking system. Granting third-party access to data types such as customer-provided data, transaction data and product data is likely to improve access to the market by incumbent fintech businesses while simultaneously improving the customer experience when accessing financial products.
Notably, the Report suggests that non-authorised deposit institutions such as fintechs or non-bank credit providers who are recipients of banking data also be obliged to provide equivalent data in response to a consumer direction. Equivalent data could include data received under the Open Banking regime, customer-provided data, and data related to the lending of money on credit.
The Report suggests a 12-month period between the final Government decision regarding Open Banking and the Commencement Date. For the second half, it is expected that the Open Banking participants including the major banks and early-adopting fintech firms will be actively testing the technology behind the data transfers.
The Report makes 50 recommendations in total. Submissions are due on 23 March 2018.