12 May 2020
On July 1 2020 what we call “open banking” took a major step forward in Australia. It was also a step towards an even more promising future, one of “open data” across much of our digital lives.
Open banking, more formally called the Consumer Data Right (CDR), is designed to give consumers more control over their personal data, enabling them to use it to choose the best products and services and access new services.
"The promise of open data lies in enhancing competition by combining data sets to create new propositions and creating ecosystems of services and platforms.”
Overseen by the Australian Competition and Consumer Commission (ACCC), consumer data relating to credit and debit cards, deposit accounts and transaction accounts are now available to be shared. Mortgage and personal loan data will be added from November.
Open data - bringing in health, telecommunications, retail and government services - will flow on in the years to come. The promise of open data lies in enhancing competition by combining data sets to create new propositions and creating ecosystems of services and platforms.
This combining and sharing of data will allow economies of data scope and scale, allowing the data to drive more solutions, making it easier for customers while making product development logistics more efficient.
The CDR is the start and it delivers ANZ an enormous opportunity to better understand, serve and attract customers. We also recognise the regime will mean our competitors will do the same.
The experience with open banking in the United Kingdom suggests we shouldn’t expect an avalanche in customer activity from day one. Yet ultimately change will be profound.
We’ve done an enormous amount of work at ANZ to be ready for this new era. We expect the major initial change to be behavioural through more customer engagement with financial apps, allowing them to track savings, earnings and expenditure across a broader canvas of providers.
We will also be able to gather a better understanding of our customers’ financials across multiple providers which will enhance our responsible banking capability and ability to make credit decisions. And that’s just the start - where the services provided to customers go will evolve over time.
As we move into this world, we’ll need to add new metrics of success, like in-app behavior for example, to the ones we currently use.
Not just compliance
Making data available under the CDR may be a legal obligation but to treat it as a complex compliance exercise is to miss the true opportunity. What drives us - and where our future success as a bank lies - is a better understanding of what customers want from us. Our challenge, and our opportunity with open banking, is to ensure we use the data customers provide us, every day, to deliver better and more relevant financial information and outcomes.
This is not just a change in mindset, it is an enormous technical undertaking. We have been working on the underlying infrastructure to deliver this for years.
What also drives us is the medium-term aspiration of a digital service economy, one that works across industries. That’s a genuinely exciting future where Australia can lead the way.
For me, success in an open economy will mean never having to fill in a form again. I might do my business with a number of trusted providers across different segments; banking, insurance, retail, utilities. I will expect them to be inter-operable and share my information appropriately - with my permission. Today all those multiple interactions are distinct and repetitive.
In addition to the CDR, giving me this seamless experience will require a few things: firstly, a unified consent management system that works across industries and stores my consents where I can easily access them. Second, I’ll benefit from a single, digital identity that I can use everywhere online. This will remove so much hassle - while being secure.
Now that’s not easy to do; it takes enormous resources to have the integrity and security of personal data to make that work. At ANZ, we have a secure cyber perimeter and we have made the requisite investments in data integrity to enable this. That’s true of the banking sector in general and it is something many other industries, who may want to compete in this space, will have to face into.
Thirdly, for this new world to work in the overall interest of consumers and economic efficiency, we also need what is known as “reciprocity”. Essentially that means participants have to contribute to the data pool and not just take from it.
Lastly, as an economy, we likely need what we are calling ‘multi-tiered accreditation’. ANZ, like other banks, holds very sensitive data and data recipients who want full access to our customers’ data need to have bank-grade environments to protect customer data.
But some organisations, maybe some fintechs, don’t need that level of data to provide a service and hence don’t need that same imprimatur. They may have customer propositions that rely more on a ‘yes/no’ answer from banks than a specific data set. Multi-tiered access would allow qualified access without building up expensive infrastructure.
July 1 is a huge step towards a new ecosystem. The capability to capture and share data is one thing, the security, the consents, the governance is another.
And financial services are just the start. An open economy will mean this regime applies to telecommunications, to energy companies, to health care, to utilities and other sectors of the economy. As that ecosystem expands, we need to build the arterial canals to support it.
It is a huge undertaking but the outcome will be a much fitter and healthier digital life.
What is Open Banking?
Open Banking is designed to open up competition in the banking sector and gives Australians more control over their data. It is built on the Consumer Data Right, as applied to the banking industry, which will soon be followed by other sectors including energy and telecommunications.
Safely sharing personal banking data
ANZ customers with open accounts in the name of a single person (not joint accounts for now) are eligible to share their data with accredited data recipients – third party organisations who are approved by the ACCC to receive data. This includes:
In this first customer data sharing release, ANZ has enabled what’s called ‘data out’, which is the ability for customers to share their data on specific products.
A future milestone will include products such as home loans, mortgage offset accounts and personal loans, as well as extending eligibility to joint accounts and closed accounts.
Emma Gray is Group Executive - Data & Automation at ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
12 May 2020
28 Feb 2020