Australia’s Open Banking Lessons

The situation 

In May 2017, Australia tasked a commission to study the concept of open banking. It took two years to pass legislation, with the application of the new regime beginning in early 2020. So, what is open banking? Open banking gives consumers ownership of their data and allows them to share their banking records with third parties of their choice. This allows them to receive better value for financial services, one by having more individual financial agency, but by also helping create more competition with goods and services by helping grow the supply-side of finance. 

Why does open banking matter? Simply put, it is a consumer centric approach to finance. It gives the individual control over their financial data, such as: account types and historical balances; information on used financial products, including rates, fees and features sought; banking and credit transaction details, including amounts deposited and spent. Importantly, under open banking, this data is no longer solely held by large financial institutions, effectively leveling-the-field on the supply-side of financial services. This helpfully allows smaller institutions, startups, and fintechs, to leverage access-approved data and compete with institutions that have dominated the industry. Power here rests with the consumer and their agency, not with legacy financial institutions. This matters for recalcitrant jurisdictions like Canada, who should consider Australia’s model to break the existing control of monopolies and drive innovation in financial services. 

Read the rest here: https://economicinsights.substack.com/p/australia…;