The Commonwealth Government has commissioned an independent review to recommend the best approach to implement an Open Banking regime in Australia, with the report due by the end of 2017.
The Productivity Commission recently recommended an open banking regime which would require the banking sector to share product and customer data when requested by the customer.
It is expected that providing data to third parties will increase competition in banking. It means fintech companies can provide services using customer data without needing customers’ passwords by using an Application Programme Interface (API).
The review will make recommendations to the Treasurer on:
1.1. The most appropriate model for the operation of open banking in the Australian context clearly setting out the advantages and disadvantages of different data-sharing models.
1.2. A regulatory framework under which an open banking regime would operate and the necessary instruments (such as legislation) required to support and enforce a regime.
1.3. An implementation framework (including roadmap and timeframe) and the ongoing role for the Government in implementing an open banking regime.
2.The recommendations will include examination of:
2.1. The scope of the banking data sets to be shared (and any existing or potential sector standards), the parties which will be required to share the data sets, and the parties to whom the data sets will be provided.
2.2. Existing and potential technical data transfer mechanisms for sharing relevant data (and existing or potential sector standards) including customer consent mechanisms.
2.3. The key issues and risks such as customer usability and trust, security of data, liability, privacy safeguard requirements arising from the adoption of potential data transfer mechanisms and the enforcement of customer rights in relation to data sharing.
2.4. The costs of implementation of an open banking regime and the means by which costs may be imposed on industry including consideration of industry-funded models.
3.The review will have regard to:
3.1. The Productivity Commission’s final report on Data Availability and Use and any government response to that report.
3.2. Best practice developments internationally and in other industry sectors.
3.3. Competition, fairness, innovation, efficiency, regulatory compliance costs and consumer protection in the financial system.