Open Banking Delayed – Instilling Trust in the System
In late December 2018, Treasurer Josh Frydenberg announced that the targeted open banking launch in Australia would be delayed by eight months. The initial 1 July 2019 public launch date has now been revised to encompass only a ‘pilot program’ to test the system.
Instead of the commencement of actual data sharing capabilities for consumers, the ACCC and Data61 will collaborate closely with the Big Four banks to test the security, performance and reliability of the system. Other banks, fintechs and consumers who have expressed interest in participating in the pilot test will also be invited to contribute.
Open Banking is the first instalment of the Consumer Data Right (CDR) legislation in Australia, which gives individuals more control over their own data. This legislation will allow individuals and businesses the right to obtain certain types of their data, which they have already shared with their financial institution, as well as provide authorised third parties access to this data.
The revised requirement timelines are as follows:
|1 July 2019
|1 February 2020
|1 July 2020
|1 February 2021
|1 July 2021
The revised timeline follows the release of the Rules Outline for the Consumer Data Right by the ACCC late December 2018. The Consumer Data Right bill has not yet been introduced into parliament. Once the bill is formally passed, the rules will be formally implemented into practice.
Industry feedback on the delay has been varied. The FinTech sector will likely not be too impressed with the delay as Open Banking has been touted as an industry “game-changer” that will level the playing field and allow traditionally smaller players to be competitive on more fronts. However, most stakeholders including consumers will see the value in the delay if it ensures that the industry is implementing a robust, reliable and secure system given the content that is being shared.
Open Banking can only be successful if there is inherent trust in the system and this new test phase will likely strengthen that confidence.