Ten FinTechs have been selected to take part as guinea pigs in testing of the open banking scheme before its official launch at the start of next year.
The Australian Competition and Consumer Commission, which is overseeing several aspects of the scheme, said on Wednesday that the ten FinTechs and startups had been selected to test the system along with the big four banks after it received 40 applications in the last month.
The tech companies would act as accredited data recipients under the scheme, with the banks to transfer consumer data to them under the open banking system.
Consumer Data Right legislation, which underpins open banking and other data sharing schemes, was finally passed by Parliament last month, allowing for the scheme to launch properly in February next year.
Open banking allows consumers to request to have their data transferred from a bank to a third-party company, allowing for more competition and ease in switching providers. It had originally been meant to kick off from July, but this was pushed back until February.
A new pilot program is to be launched soon which would see the big banks test the “performance, reliability and security of the open banking system”, along with the participating FinTechs.
FinTech firm MoneyTree was one startup selected to take part in the tests, with its founder Ross Sharrott saying the scheme would ultimately benefit Australian consumers.
“We’re excited to be in the group of companies that will test the exchange of financial data under Australia’s open banking framework. The rules and standards for this new business environment offer huge potential for financial services organisations to improve their customer experiences,” Mr Sharrott said.
“Data exchange will have less friction and customers will become more empowered to manage their data, determining who to share it with, for how long and for which purposes. At the same time, the protections and guarantees for the end-users are high and better than what existed prior to open banking being implemented.”
Neobank 86400 would also participate in the trials.
“We firmly believe Australians should be in control of their own financial data, enabling them to choose where – and with whom – they securely share that information” 86400 chief information officer Brian Parker said.
“This belief is why we built our smartbank with open banking principles firmly in mind.”
“We look forward to helping bring the open banking ecosystem to life so Australians can access better banking services, take control of their finances and switch banks if and when the time is right.”
The ten FinTechs to take part in the testing are 86400, Frollo, Identitii, Procure Build, Quicka, Regional Australia Bank, Verifier Australia, Wildcard Money, Intuit Australia and MoneyTree.
These companies are also expected to apply for full accreditation under the scheme in the lead up to its proper launch.
“Our intention is that participants in testing will be ready to participate in the CDR ecosystem from February 2020 following successful progression through testing, demonstrating their ongoing capacity to meet eligibility criteria and comply with the rules,” the ACCC said.
“Participation in the CDR ecosystem from February 2020 as an accredited person of course requires the person to achieve accreditation under the rules.”
The competition watchdog also released a draft version of the Consumer Data Right accreditation guidelines, the means through which potential data recipients under the scheme would receive accreditation.
Companies will first have to set up an account on the CDR Participant Portal, and then complete the relevant accreditation form and submit it for assessment.
Applicants will be required to outline the intended use of the data, whether they will also be a holder of designated data and a policy on how it will manage data, along with information security arrangements.
There is currently only an “unrestricted” accreditation on offer, but additional levels are expected to be introduced later on in the scheme.