Macquarie has launched an ‘Australian-first’ open banking platform, letting its customers to share their own data with local FinTech startups.
The API-driven open banking platform gives customers the option to connect their bank data with third-party providers, removing the need to reveal their banking logins to these providers.
Macquarie Bank announced its plans for the open data platform earlier this year, and has now launched the program in pilot mode, with plans for a wider roll out by the end of the year.
Data that customers would be able to share through the platform includes transactions, home loan balances, as well as business and wealth data.
Macquarie Bank customers would be able to manage who gets access to their data in real-time through the bank’s app, and will be able to connect this data with services like budgeting apps or accounting software.
Any FinTech startup would be able to connect with the platform, provided they met Macquarie’s open platform standards and security criteria.
This is the first platform of its kind from a bank in Australia, with the smaller Macquarie getting a jump on Big Four competitors, which have all cautiously supported the notion of open banking in Australia while at the same time raising concerns about costs and security.
The Macquarie announcement comes in the same week that submissions close to the government’s independent review of open banking.
Tyro FinTech Hub head Andrew Corbett-Jones said Macquarie has now “leapt forward a year or two” from its competitors.
“As the Big Four face being dragged through a months-long review, Macquarie has demonstrated exactly what we’ve been saying all along: banking data is the customer’s, and by allowing access to that data the big banks will actually be strengthened, not weakened,” Mr Corbett-Jones told InnovationAus.com.
“More importantly, consumers will benefit from better, more innovative and cheaper banking products and services,” he said.
“The other banks are saying that security is an issue, that the technology will be costly to implement and yet Macquarie has quietly gone about addressing those ‘hurdles’ with no fuss.”
Head of personal banking in Macquarie’s banking and financial services group Ben Perham said the platform was the “first in Australia.”
“Our customers have been telling us they want to securely connect their information into their favourite accounting software, budgeting app and other innovative services they’re interested in. Macquarie’s open platform will make this possible,” Mr Perham said in a statement.
“We’ve built a highly personalised digital banking experience, so empowering our customers to securely manage how they want to use their own data is the logical next step,”
“We’re looking forward to working with third party providers and developers to drive new and more personalised solutions for our customers that tie in seamlessly with daily life.”
Proviso is an Australia data aggregating company that provides a similar service, with customers giving permission and their login to the FinTech, which then retrieves the requested data.
Proviso CEO Luke Howes said Macquarie’s platform could “set the standard” for open banking platforms.
“It’s fantastic, it’s the way of the future. Rather than government pushing it or regulators enforcing it, they’re getting on the front foot and going where the consumers and markets want and need this to go,” Mr Howes told InnovationAus.com.
“This will set a standard for what a bank can do. They’re such a well-known name even though they’re not as big, and they’re being progressive. That starts to change the conversation around the advantages for banks in this, rather than the perception that it’s a disadvantage for banks.”
The Macquarie platform also comes before the government’s plan to introduce an open banking regime in Australia by next year, as it revealed in this year’s budget.
In July, the government commissioned an independent review into how this would work, which is set to report back to the Treasurer by the end of the year.
“This will empower consumers to seek out banking products better suited to their needs and create further opportunities for innovative business models in banking that enhance competition,” Mr Morrison said.
Open banking has the potential to completely change the game for local FinTech players, Mr Corbett-Jones said.
“Open banking, together with moves to encourage new entrants into banking, is the most significant development in FinTech this year,” he said.
“But until now there have been very few real options for FinTech entrepreneurs, and the banks have not demonstrated genuine, sustainable cooperation with FinTechs.”
“Without access to customers’ banking data, Australia’s FinTech startups are faced with either withering on the vine or competing against each other for the attention of the Big Four banks, and the few ‘winners’ in that race face a very one-sided relationship, one in which they have very little bargaining power.”
Mr Howes said the Macquarie open data platform was a good starting point to demonstrate the potential benefits for consumers, FinTechs and banks themselves, but things will really start to get exciting next year when it is more widely adopted.
“It’s the very beginning, and it’s only one bank. We need a lot more banks to be participating to make it really interesting. It’s a great starting point, but it doesn’t have all the data we currently retrieve. But they need to be really praised for what they’re doing,” he said.