Open banking resumes as bureaucracy lifts
New data shows that 62% of banks plan to use open banking data in the next 12 months and 38% in the next six months.
The annual industry report from Australian open banking provider Frollo shows that data availability has accelerated and optimism for the future of open banking is growing.
According to the survey of 131 financial institutions, 70 banks started sharing consumer data and 14 companies became accredited data recipients in the first 10 months of 2021.
This is an increase from just five data holders and five data recipients in 2020
In October, the Treasury announced changes to its Consumer Data Law (CDR) rules that allowed increased participation in open banking.
These new amendments allow current CDR participants, accredited by ACCC, to sponsor other parties to become accredited or allow them to operate as a representative, thereby reducing much of the bureaucracy that surrounded the banking legislation open in Australia.
Australian Finance Group COO John Sanger said easing open banking restrictions could be a game-changer.
“We see Open Banking as a transformative catalyst for future customer experiences and products that can change the way consumers borrow, save and manage their finances,” said Sanger.
New data from Frollo shows tThe most popular uses for open banking:
- Loans: income and expense verification (highly rated by 59% of respondents).
- Money management: Multibank aggregation (50%) and Personal Finance Management (50%)
- Verification: Client Onboarding (49%), Identity Verification (38%), Account Verification (34%), and Balance Verification (30%)
“The first year of the Consumer Data Right could be seen as a great proof of concept, in which the ecosystem has proven itself capable of creating and delivering open and engaging banking use cases,” the report said.
“With many regulatory, data and technological elements in place, now is the time to start creating consumer experiences based on Open Banking. The second year will see access to open banking increase with many more consumers being able to access open banking in many more places. “
How fast are APIs?
The API (Application Programming Interface) allows third parties to retrieve information and data from account holders and share it with other accredited data recipients.
Frollo’s report also analyzed response time from Q3 2021.
What’s the next step for open banking?
While companies are keen to start using CDR data, the consensus is that the current reach is limited.
According to Frollo, there is a lot of interest in potential future additions, such as retirement (75%) and investment (72%) products.
Most respondents believe that the financial product change (83%) and Open Banking payments (78%) will be valuable to their business.
Image by Viktor Forgacs via Unsplash