Banks place open data access firmly on the agenda following inquiry
(7 March 2017 – Australia) Australia’s “big four” banks have agreed to allow open access to customer data following a parliamentary inquiry that recommended banks be forced to give access to customer data to help fintechs now pushing against the market share of the banks.
Bank CEOs were questioned for a second time in the House of Representatives Economics Standing Committee hearings in Canberra. In general, the CEOs have come to the realisation that disruption by fintechs is inevitable and many of them have invested in the sector.
However, the issue they worry about is data breaches and possible large scale identity theft. One banks says it comes under cyber attack on average every four minutes.
The parliamentary committee has recommended that the law be changed to have penalties against the banks if they don’t open their data vaults by July 2018.
However, the banks think the timeline might be a little optimistic, given the security issues. They want to see a phased implementation.
Westpac is generally in favour of opening the data doors.
“Westpac strongly supports the development of an enhanced data-sharing regime in Australia,” CEO Brian Hartzer told the parliamentary committee.
“Data, when used effectively, provides immense value to consumers, business and the government and will ultimately help ensure Australia’s global competitiveness through an innovative and productive economy.”
Westpac, along with the NAB and Qantas, has invested in Data Republic, an Australian start-up with a platform where data can be exchanged in a secure environment.
However, the security concerns remain one of the biggest issues.
“Recent data breaches globally have continued to impact Australian consumer confidence in data sharing. While a customer can be compensated for fraud losses, a customer cannot be compensated for the harm or anxiety of a stolen identity,” Hartzer said.
Shayne Elliott, CEO of the ANZ, said greater consumer access to their personal data could “help them choose products and services that best suit their needs, and help competition and innovation,” he says in response to the committee’s proposal.”
He added: “Secure and well-designed data access arrangements for customers are already, and will continue to be, a source of competitive differentiation,” says CEO Shayne Elliott.
“Currently, we make substantial amounts of data available to our customers including through arrangements with accounting software providers for direct data feeds and data downloads through our internet banking portal.
“Opening up sensitive data like customer transaction details, however, raises a number of issues that need to be considered and resolved.”
Commonwealth Bank CEO, Ian Narev says the bank already has data sharing arrangements with Xero, MYOB and Airtasker.
“Open data presents opportunities to improve service quality and competition for customers, provided the security and privacy of customer data and finances are maintained,” he said.
“We are committed to using data to make it easier to switch banks, as well as to give customers greater visibility over quality of service metrics, including at a granular level.”
NAB also has partnerships with cloud accounting firms Xero and MYOB, along with other firms, how it says: “NAB urges caution against the adoption of mandatory data sharing requirements due to the potential impact on existing industry work and innovation, the likely cost incurred and the importance of ensuring security,” the bank says.