30 May 2019
One component of a shift to an Open Data economy, open banking has the potential to dramatically change New Zealand’s financial services landscape, bringing numerous benefits to customers and users of data with consumers using their data to gain greater insight into how they manage their money and improve their overall financial wellbeing.
Today, financial services organisations hold their customers' data ‑ sharing it with third parties is difficult and complex. For example, bank customers can only share their transactional data by exporting or printing it then sharing their statements with one third party at a time.
"If you want to go fast, go alone. If you want to go far, go together.” - African proverb
In contrast, open banking will allow customers to share their data seamlessly with accredited third parties of their choice. This will give them more control and transparent oversight of their financial information.
Open banking will facilitate greater innovation and improved customer value propositions, leading to a more personalised customer experience that goes beyond traditional banking.
Using data-driven insights, banks and other parties will be able to develop lower cost services and reduce fees while better supporting financial wellbeing and potentially improving financial and digital literacy and inclusivity.
Open banking will also make it easier and faster for ANZ to work with third parties and deliver on our ambition of helping customers improve their financial wellbeing. Whether that’s saving for or buying a home; or starting, running and growing a business. There are endless benefits of using data to offer better product suitability, easier onboarding, faster loan or credit applications and a more insightful choice of products and services.
Maintaining trust in an open world
Customer privacy and data protection is critically important. While our customers have a high level of trust in ANZ, they are hesitant about sharing their data and rightly expect ANZ to protect their personal information. ANZ takes this responsibility seriously. As open banking develops, the banking industry will continue to invest in data security, while importantly educating customers on how their data is being shared. This will allow customers to make better decisions on how they use their data, while also remaining in control.
As happened in Australia, New Zealand has opted for Consumer Data Right (CDR) legislation and we’re taking an industry-led approach (as opposed to the UK’s regulation-first approach). New Zealand’s CDR legislation will have a similar focus to the UK and Australian model protecting consumer’s rights across a range of sectors including banking, telecommunications, utility providers and government.
The industry-led approach allows banks and other interested parties to help shape the legislation and make it fit-for-purpose. New Zealand is taking lessons from the overseas experience, applying an iterative approach across sectors with the aim of creating a legislative framework that will work for all New Zealanders. There are many ways banks, retailers, fintech companies and governments can work together to create a sustainable open data ecosystem.
As we continue to develop open banking, I’m reminded of this African proverb: “If you want to go fast, go alone. If you want to go far, go together.”
If we can learn anything from overseas, it’s that creating an open data ecosystem takes time. It’s complex, costly and there isn’t a perfect model to follow. There is also a growing acknowledgement and appreciation of the different perspectives and capabilities banks and fintech companies bring to the table. We’re seeing a convergence between banks, who have built a trusted, safe and secure ecosystem through strong risk management practices, and the fintech’s ability to be agile, move at speed and present a new way of thinking. Such disruption and innovation can lead to better customer outcomes.
What will it take to be successful?
Open banking must enable an ecosystem of shared services and value propositions that are consistent, trusted and easy to understand by users. This is no small task. When we think back to the introduction of the electronic direct debit or the EFTPOS network, from technical, operational and commercial aspects, these examples highlight the significant collective effort required to develop and deliver these types of services.
Getting on board
I have the privilege of working with the financial and fintech community to help shape the New Zealand ecosystem through the API Centre, Digital Identity NZ and by meeting with everybody - from government to up-and-coming entrepreneurs and start-ups developing new and exciting customer propositions.
Here are a few of the key questions I always ask:
1. What is the value proposition?
It’s important you’re clear on your proposition – what value are you providing to the consumer? How is your offer different to what they experience today? Can you demonstrate how you have or will validate the proposition?
If you want to leverage capability and/or investment from banks, consider how your proposition could benefit or be accelerated by accessing the bank’s capabilities, trust, engagement and distribution.
2. How will you protect customer privacy?
We’re dealing with people’s personal information so it’s vital we protect customer privacy. You will need to demonstrate how you can keep customer data safe and secure. Your data security, governance and risk management needs to meet banking industry standards.
It’s important you consider operational risk early and continuously review through your product development lifecycle. Try not to run before you can walk – you’ll need to earn customer trust over time.
Banks have proven delivery and risk management practices. By partnering and sharing of insights this can help in making simple design changes upfront and minimise the risk exposure for all parties, thus ensuring a faster pathway to market.
3. What are the key assumptions that underpin the business model?
To be successful with your product or service, you’ll need both a strong customer proposition and a sustainable business model. Understanding and validating the assumptions behind your business model early is just as important as validating your customer proposition. What is your pathway to market? What data and services does your proposition need? When will these be available? What will you need to demonstrate in order to access these services? What other data and services could you use to enhance your proposition?
It’s still early days for the open banking ecosystem in New Zealand and there are many opportunities ahead and questions to be answered. There’s also a lot of work to be done to inform legislation and balance the need to deliver customer benefits with the requirement to protect data.
ANZ has committed time and energy to building out our technical readiness and are now focusing on aligning industry standards with our operational cadence. By working together, we can better understand the different perspectives and challenges, test ideas, solve common problems and ideally develop stronger value propositions and outcomes for all.
So, while we could all go alone into this new open banking frontier, I believe going together is where the magic will happen. It may take longer, require more rigour and compromise but once we’ve earnt the trust of each other, opportunities for further collaboration will grow and accelerate New Zealand’s open data economy for the good of all Kiwis.
Jody Bullen is Digital Lead – Data and Open Banking New Zealand 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.
30 May 2019
27 May 2021