Open banking revolution off to a tentative start
Australia has a new banking code of practice with banks told to treat customers fairly
The move to an open banking regime in Australia is more a "subtle shift", than a seismic change, according to Rob Nicholls, a senior lecturer at UNSW Business School.
“The initial moves in this area are far from perfect, but they are a step in the right direction, and when we see the effects of the roll out, we can look for more improvements,” he says.
Australia’s consumer watchdog, the ACCC, will oversee the introduction of open banking. However, only a new pilot program is in place and this deals only with generic product and service data.
“The first full phase, involving customers’ data, has now essentially been delayed 8 months. New timeline transaction and mortgage data won’t be available until February 2020,” says Nicholls. “Compare this with the UK, which has fully embraced open banking, and which has rolled it out quickly.”
Other changes introduced include the way small business will also be offered smaller and simpler contracts for their loans.
“This is great news,” says Nicholls. “Small businesses now have the type of protection that has been reserved for consumers. The contract simplification makes these documents much easier to understand and reduces small business risk.”
There are also new low-fee or no-fee accounts to customers on lower incomes.
“We have waited for this measure for a long time. It’s especially important for people on pensions and to minimise employer under-payment in cash”, Nicholls says.
People with credit cards will also need to be told when their introductory offers are about to run out.
“In an environment where the difference between the ‘honeymoon’ and regular interest is 20 percentage points, this is critical. It also gives people the chance to switch after the honeymoon is over,” says Nicholls.