(14 January 2020 – Australia) FinTech Australia believes the Australian Consumers and Competition Commission (ACCC) has made regulatory imposts too onerous for new entrants to take advantage of Open Banking while supporting the need to protect consumers.
The ACCC model creates a single level of unrestricted accreditation that requires data recipients to hold insurance and meet a variety of strict requirements on information security controls. 40 percent of fintechs intend to become an accredited user of data however Fintech Australia asserts that concerns are growing about the sizeable costs to meet minimum standards reaching as high as A$100,000.
Start-ups will continue to access banking data via ‘screen scraping’ which involves customers providing passwords so Fintechs can scan account statements, a current work around until Open Banking is implemented with the roll out delayed by up to six months due to security concerns.
“There is some concern amongst FinTech Australia members that the implementation of open banking under the CDR will further assist incumbents and will not foster innovation. A fintech company is required to test its product market fit and viability quickly and cheaply to allow it to commercialise or pivot without losing money. Requiring a company to expend significant time and upfront costs required to become accredited simply to undertake those initial tests is cumbersome and economically unviable in many cases,” according to a quote from Fintech Australia’s submission.
“In the case of startups, this requirement may well be prohibitive.”
“While highlighting the challenges and design improvements to ensure open banking succeeds, the start-up industry remains optimistic that open data could create competitive advantages for Australia and potential export opportunities as overseas jurisdictions consider similar regimes. Australia “is at a significant advantage to establish itself as a world leader in the field”
The Senate Select Committee on financial technology and regulatory technology, which is being chaired by Liberal Senator Andrew Bragg, is preparing to conduct hearings in the next month, publish an interim report in the first half of the year and deliver a final report in October.