Aussies now have more control over their financial data than ever before thanks to a major change for the banking sector, which came into effect earlier this year.
Instead of remaining loyal to one bank throughout your life, you now have the freedom to request that your information be shared with competing institutions through open banking. It’s been in effect in the United Kingdom for some time now, and Australia has followed in its lead, with the Big Four the first to come onboard.
Though the idea of having your data shared with multiple banks may seem daunting, it’s actually a positive move for the industry and effectively means you can compare products, such as credit cards and debit cards, with greater ease and find the best deal to suit your needs.
Open banking has only been in play in Australia since July this year when testing of the process began. Currently only the Big Four (Commonwealth Bank, NAB, Westpac and ANZ) are able to share data between one another, but in July next year, the smaller institutions will also have it available.
If requested to do so by the customer the Big Four must share financial information, for products such as credit and debit cards and deposit and transaction accounts, with other institutions for them to analyse. This is done through software called application programming interfaces (APIs). In simple terms, this is basically a program which connects to the Internet to send data in an easy to understand format.
Once the competing bank receives this information, they then have the opportunity to offer better deals to you, the customer – which is great news!
In July next year the Big Four banks will also be able to use to the data to compare personal loans and savings accounts, followed by mortgage products in February 2021. Then finally, by July 2021 all banks, big and small, must have API up and running to share data for all types of products.
Your bank holds a lot of information about yourself, both personal and financial, and much of this can be shared with competing institutions as part of the new process. This includes product data, customer data, account data and transaction data.
Breaking it down, competing banks – with your approval – are able to see information on rates, fees and the features of each of your current bank products, as well as personal information such as your phone number and address, your bank account balance, regular repayments and transaction history.
From February next year you’ll also be able to request access to your information, as long as you bank with the Big Four. Just like Commbank, Westpac, NAB and ANZ, you’ll have the right to see your own financial data for credit and debit cards, deposit accounts and transaction accounts.
Although you can access some of your information through online services or during a visit to your local branch, you can request a full run-down of the data that the bank has on file.
While sharing with other institutions will help create competition among banks and ultimately better product deals, accessing your own data could give you a better picture of how healthy your finances are. For example, you might be considering taking out a loan but, after looking at your data, realise that taking on extra debt may be problematic.
Banks are only allowed to share your financial information with other institutions at your request, meaning it won’t be made available to just anyone. Further to this, only institutions that are accredited can access to the data on file.
Currently only the Big Four are allowed to share customer data at their request however, as previously mentioned, other banking institutions, also known as ADIs, will be granted approval in the coming year. These ADIs have been granted authority by government agency, the Australian Prudential Authority to carry out banking business in the country.
Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.