Switching banks, phone plans or energy companies may become much simpler and easier in the future, with the help of a new federal government Open Banking initiative that gives consumers the right to access to their banking data.
In his 2018 federal budget speech, treasurer Scott Morrison described the goal of the Consumer Data Right as “giving small businesses and households more control, more choice and better deals.”
Based on the findings of the Report of the independent Review into Open Banking in Australia, the Consumer Data Right will allow Australians to quickly and easily access their own personal and financial data, as well as improved information on key goods and services, such as banking, energy, and telecommunications.
According to the Treasury’s fact sheet, the benefits of the Consumer Data Right may include improvements to:
- Comparison tools for credit cards and mortgages, with product recommendations tailored to consumers’ actual spending and repayment patterns;
- Comparison tools to assist small businesses to identify better business lending products, taking into account historical borrowing needs;
- Budgeting tools that show consumers all their financial products on one screen and help them better manage their finances by providing insights into current spending habits;
- Services that use small businesses transaction data to provide insights or meet compliance obligations.
- Analysis tools that look at a household’s past energy use to help them choose a better energy plan;
- Analysis tools that use the level and timing of a household’s energy usage to help them to determine the net benefits of investing in solar power and the size and type of system that would best suit them; or
- Comparison tools that help consumers locate the best mobile phone and internet service provider deal for them, based on their actual mobile phone and internet data usage.
The Government’s $45 million in funding over four years is set to back up the Consumer Data Right with well-funded regulators with strong enforcement powers, including the Australian Competition and Consumer Commission (ACCC) to set accreditation criteria and processes for data recipients and enforce serious or systemic breaches, and the Office of the Australian Information Commissioner (OAIC) to oversee privacy protections.
ACCC chairman Rod Sims describing the introduction of a consumer data right in Australia as “a fundamental competition and consumer reform.”
“This new right will improve consumers’ ability to compare and switch between goods and services on offer. We expect the scheme to encourage competition between service providers, leading not only to better prices for customers but also more innovation of products and services.”
Australian Banking Association CEO, Anna Bligh, also voiced support for Open Banking, emphasising the importance of getting the reform right, with the security of customer data at the forefront of policy making.
“Banks are committed to delivering this reform within the tight timeframe and are looking forward to seeing further details contained in the draft legislation as soon as possible.”
The Consumer Data Right is scheduled to start its phased implementation with the introduction of an Open Banking program for credit and debit cards, deposit and transaction accounts from the big four banks by July 2019, with mortgages expected to follow in 2020.