While it is still early days, the transition to open banking has officially began with customers now able to request their bank share their transaction account data within the big four.
MPA spoke with FBAA managing director Peter White AM about what the future is likely to look like following the recent launch of the consumer data right and why brokers should embrace this change.
A strong positioning statement
On 1 July this year, the ACCC announced the launch of the consumer data right, something that would allow the big four to securely share a customer’s data with other lenders at the request of that customer. Due to be rolled out in full over the next six months, the move is a big step forward for the Australian lending industry when it comes to the rights of consumers.
While it is too early to tell what this change will look like for mortgage brokers, White says the future looks bright.
“I think the whole opportunity around open banking here will be really good for our industry.”
“I also believe it will help drive the broking industry further in combination with the best interests duty.”
He says BID guidance, alongside open banking, will provide a strong positioning statement that brokers can use to bolster their proposition – showing customers that not only are brokers required to act in the clients’ best interests, they can also turn loans around quicker thanks to the fluidity of data sharing created by open gateways.
“When you’re trying to gather data on a client or to be able to restructure a mortgage, open banking should deliver something that is a much quicker means of sharing that data from a mortgage point of view.”
Lessons learned from overseas
At the moment, open banking only applies to the transaction account and credit and debit card data of major bank customers, with non-majors set to join the piece in October. Open banking will then be rolled out to include the mortgage and personal loan data of customers at the big four in November, while loan information for non-major bank customers will be included early next year.
“At the moment it’s a bit of a futuristic conversation.”
“The entire market won’t benefit from it until early next year.”
As part of an early conversation, White believes it should be a good thing for the industry; with experience overseas pointing to a strong advantage within the Australian market.
“I was overseas on a study tour last year speaking to guys in the UK about their open banking experience.”
“They believed, with the way that Australia was geared and the mindset in Australia, that open banking will progress significantly quickly over here and provide great outcomes.”
“They’re expecting Australia to really step forward in big strides on this and overtake the UK and other markets around the world in regards to the use and the fluidity and functionalities of open data.”
Moving with the times
To prepare for this new way forward once the roll out has been fully implemented, White says brokers should take the time to understand how the technology will work.
“Embrace the future, don’t try and push back against it.”
“The most important thing brokers need to be doing is making sure they are tech savvy, that they understand what this technology will and won’t do, and how it will work in their systems.”
“I believe aggregators need to be looking very closely at how they can take advantage of the integration of open banking and where that plays out in their spheres.”
“This is where we’re going. It may be new in Australia, but it’s happening around the world, and the technology driver is where we’re all destined to be.”