In the 2017-18 Budget the Australian government announced that it will introduce an open banking regime in Australia. On July 20, the government announced the commissioning of an independent review to recommend the best approach to implement an Open Banking regime in Australia, with the report due by the end of 2017.
An open banking regime is intended to increase access to banking product and consumer data by consumers and third parties, if the consumer consents. It is expected to empower consumers to seek out banking products better suited to their needs and create further opportunities for innovative business models in banking to drive greater competition in banking and contribute to productivity growth.
The review will draw upon technical expertise from the private sector as required and will consult broadly with the banking, consumer advocacy and FinTech sectors and other interested parties in developing the report and recommendations.
It will make recommendations to the Treasurer on the most appropriate model for the operation of open banking in the Australian context, setting out the advantages and disadvantages of different data-sharing models.
It will look at the regulatory framework and the instruments required, such as legislation.
In addition, the review will come up with an implementation framework (including roadmap and timeframe) and the ongoing role for the Government in the implementation.
The recommendations will include the costs of implementation of an open banking regime and the means by which costs may be imposed on industry, including consideration of industry-funded models.
It will examine the scope of the banking data sets to be shared (and any existing or potential sector standards), the parties which will be required to share the data sets, and the parties to whom the data sets will be provided.
It will also look at existing and potential technical data transfer mechanisms for sharing relevant data (and existing or potential sector standards) including customer consent mechanisms.
Considerations such as customer usability and trust, security of data, liability, privacy safeguard requirements arising from the adoption of potential data transfer mechanisms and the enforcement of customer rights in relation to data sharing will be factored into the recommendations.
The review will take into account the Productivity Commission's final report on Data Availability and Use and any government response to that report, international best practices, competition, fairness, innovation, efficiency, regulatory compliance costs and consumer protection in the financial system.
An Issues Paper will shortly be made available for interested parties to provide input to the review.