Fintech players welcome open banking paper

Open banking reforms will create a more competitive playing field for fintech start-ups

11-Aug-2017

By Penny Pryor

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The fintech community has welcomed the government’s release of an issues paper on its review into open banking.

“This paper provides further clarity about key issues that need resolution in order for us to proceed with this important and long-awaited reform to improve consumer choice and banking competition,” Fintech Australia chief executive Danielle Szetho said in a statement.

The government’s independent review is headed by King & Wood Mallesons partner Scott Farrell and is due to report by the end of the year. Submissions on the content of the issues paper are due by 22 September.

Open banking would allow bank customers to share data including their account number and password with fintech apps that could help them to improve their financial situation, such as by consolidating accounts or investments.

The government’s issue paper said that as well as looking at what data should be shared, and by whom, the review will also look at how that data should be shared.

“The review will consider specifications and rules (including legal frameworks) to govern the data transfer process in order to provide appropriate protections for customers, whilst being flexible enough to accommodate future technological innovation,” the paper stated.

The review will also consider how those rules could influence competition, with the option to limit the reforms to the largest banks, as was the case for a similar regime in the British market.

Another key consideration would be whether third parties could ensure customer data was kept secure, which to date had been one of the biggest concerns with open banking among the big four banks.

“This [consideration] may include examination of related responsibilities and how to determine and apportion liability for data breaches, and how to ensure there are appropriate avenues for redress and compensation,” the issues paper said.

Szetho said that the fintech industry was also keen to further explore the paper’s option of creating banking industry-specific data legislation, rather than tying open banking reforms to a whole-of-government resolution on data issues.

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