Open Banking in Australia
Open banking initiatives are suddenly popping up all over the world from Brazil and India to Japan and New Zealand, but of all markets, Australia looks to have learned most from what has happened so far in the US and Europe.
The concept of open banking is hardly new because some fintechs have been using account aggregation in their business models for more than a decade.
The aim was to let consumers share financial data from across their personal landscape with service providers of their choice.
But this aggregation failed to have the desired impact because of an ongoing dispute over whether financial data belonged to the consumer or the institution.
Europe’s General Data Protection Regulation (GDPR) and Revised Payment Services Directive (PSD2) have now made it clear that consumers own the data.
This enshrines the consumer’s right to share their data, legislating the process and liability framework so they can give consent and take it away.
Fintechs have had to go through a regulatory process to show they are fit and proper custodians of this data.
The lack of a consumer data right has been a fundamental problem in the US, where the concept of open banking dates back to the late 1990s.
As a result, the market has become fragmented with many agreements between one bank and one fintech.
This makes it almost impossible for a consumer with multiple accounts to get a true view of their financial situation.
Britain has played a lead role in the global development of open banking and Australian fintechs such as Trade Ledger and Mogoplus have already entered the market to take advantage
