History repeats: Open banking delayed again

James Riley
Editorial Director

It was a case of history repeating itself in the dying days of 2019, as a delay to the launch of open banking was announced on the last Friday before Christmas, for the second year in a row.

The Australian Competition and Consumer Commission (ACCC) quietly announced on December 20 that the long-awaited launch of open banking would be pushed back from February to July.

This is due to the competition watchdog’s difficulty in ensuring the security and reliability of the systems needed to facilitate the transfer of data from the big banks to smaller FinTechs.

Open banking delayed again in Australia

As part of the new timeline, from July this year Australians will have the ability to order the major banks to share their credit and debit card, deposit account and transaction account data with accredited FinTechs.

Mortgage and personal loan data will be included in the scheme from November.

It comes after the scheme was also delayed in the lead up to Christmas in 2018, with the launch originally slated for July last year.

Open banking is the first sector where the Consumer Data Right will be applied, with energy to follow.

The ACCC is currently working with the big four banks and nine FinTech firms to test the open banking systems and methods of transferring data.

“The CDR is a complex but fundamental competition and consumer reform and we are committed to delivering it only after we are confident the system is resilient, user friendly and properly tested,” ACCC commissioner Sarah Court said.

“Robust privacy protection and information security are core features of the CDR and establishing appropriate regulatory settings and IT infrastructure cannot be rushed.”

Quicka is one of the FinTechs working with the ACCC on the tests, and its chief technology officer Nick Glynn said this process has been complex.

“Unfortunately delays do happen, which is frustrating for all involved. I think a big realisation for us and other data recipients is simply the asymmetry in resources between the established and the smaller startups taking part,” Mr Glynn told InnovationAus.

“Whenever a data provider takes time or misses a deadline the knock on effect of it is a lot of frustration from teams like Quicka, where we’d carved out some resources for development.

“The testing within the ACCC is being managed reasonably well from a technical perspective – some of the most productive conversations have been between the pure engineering teams, but obviously there’s a lot of stakeholders and multiple tracks that are involved.”

FinTech Australia general manager Rebecca Schot-Guppy said the new delay is due to the big banks dragging their feet.

“It is unsurprising given some of our members expressed doubts that the major banks would have their data formatted and ready in time for the policy launch in February 2020,” Ms Schot-Guppy said.

‘We understand and appreciate the importance of testing the CDR system to ensure that it is robust and resilient.”

In the six months before the launch, more FinTechs should be given the opportunity to participate in open banking trials, Ms Schot-Guppy said.

“In light of the extended timeline, we will suggest additional FinTech businesses be allowed to test the CDR to hone their offerings ahead of its launch in July 2020,” she said.

The initial launch of open banking was delayed in late 2018 after the Coalition failed to pass the necessary CDR legislation. This bill was finally passed in August with support from the Opposition.

This was despite a slew of Labor MPs speaking in Parliament of “deep concerns” with the new data-sharing laws.

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