Open banking in Australia
What is open banking and how could it affect you? Read more to get an idea on what’s happening in open banking in Australia.
Note: this article is a general education piece. Thornmoney does not currently use open banking in our application processing.
Since the commencement of open banking in Australia in 2020, banks, financial institutions (both major and non-major), and other authorised organisations, such as fintech businesses, have come together to leverage expertise and user experiences thus giving customers greater control over their banking data.
According to Anna Bligh, Australian Banking Association CEO, “This sharing of data is a watershed moment for competition in the banking industry and will enable every Australian to use their data for their own benefit. Customers can be assured that they will always be in control of how and when they share their data.”
what is open banking?
Open banking (otherwise also known as Consumer Data Right) gives you the option to share your banking data securely with Australian Competition and Consumer Commission (ACCC) accredited third parties (mainly banks, credit unions, online lenders, money management apps, and fintechs among others) through the use of application programming interfaces (APIs). With your consent, the latter will have access to your savings and credit card data so that you can acquire better-suited banking products and switch banks/providers with ease. Things you would be able to share through open banking include transaction account, deposit account, credit card and debit card data, loans, joint accounts, scheduled payments, personal information, and payee data.
the general benefits of open banking
In a nutshell, open banking creates an open network of shareable data between financial institutions. To rephrase, it can help you search for better banking deals and keep track of your banking all in one place.
In terms of privacy, open banking gives you control over which third party gets access to your data and how they use it. In other words, you no longer have to call individual lenders to compare banking products or what they have on offer. Instead, third parties get temporary access to audit your financial history and risk profile resulting in quicker quotations and better personalised experiences.
how do you use open banking?
There are numerous ways open banking can be used but the best example would be opening an account or switching to a new bank. In the past, you would have to gather all your banking documentation and present them to the new bank either in person, online, or over the phone. However, things have changed thanks to open banking. You now will be able to request your existing bank to transfer the desired documentation over to the new bank with the simple button click. Thus, saving time and effort on your end. Other examples include the use of budgeting apps to help keep your finances in check and business finance apps to help manage cash flow.
the benefits for SMEs
Open banking gives you control over your financial data and makes it more convenient to share your data with companies that you trust. It makes shopping around for financial products and services significantly easier too, saving both time, effort, and money in the long run. Plus, you will be able to find products that are personalised and more tailored to your financial situation. Not to mention, the transparency of open banking allows you to compare these products and services. That help you make better-informed decisions as well.
In addition, increased bank account security and new security measures provided by open banking technology will make it more difficult for customer data to get hacked.
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