Unlike in the UK, where open banking was introduced to encourage competition in the financial services sector, Australia’s open banking regime is a consequence of the Consumer Data Right (CDR), which aims to let customers get greater access to and control of their data to get the best outcomes for themselves.
A new report by Senior Analyst Zhi-Ying Barry analyses what open banking in Australia entails, how financial services firms are responding, and what banks should do about open banking.
Some highlights from the report include:
- Open banking is slow to take off. Despite being announced two years ago, most Australian banks are still dragging their feet in complying with it. According to Forrester data, only 8% of purchase influencers in Australia’s financial services industry see open banking as core to their strategy.
- To make open banking a reality, banks need to build awareness. 83% of Australian consumers are unaware of or unsure about open banking and the relevant legislation. However, they do have an appetite for products and services enabled by open banking: 37% of Australian online adults are interested in using online or mobile tools to manage their money; nearly half are willing to share financial data online.
- Leading banks are already experimenting with APIs. Open banking is underpinned by APIs, which drives connectivity to the heart of banking strategy and will have a far-reaching long-term business impact. NAB, Westpac and Macquarie Bank are examples of banks that have started using APIs to build new ecosystems and products, serve customers, and/or reduce their time-to-market.
- Fintech startups are moving aggressively to innovate with APIs. B2B fintech startups and digital banks are moving quickly to capitalise on the opportunities that open banking brings. These nimble startups are focusing on building unique or innovative value propositions around solving specific banking and customer problems by partnering prolifically and using B2B APIs or open APIs.
In addition, Analyst Meng Liu has published a separate report on the state of digital retail payments in Asia Pacific. It examines the landscape, opportunities, and challenges of digital retail payments in six major markets in the region: Australia, mainland China, Hong Kong, India, Japan, and South Korea. Australia lags behind in usage as consumers in Australia are used to existing payment methods and have few incentives to shift to digital retail payment methods.
Please also see the following blog posts for additional insights:
- Open Banking In Australia: Where Are We Now?
- Four Catalysts Contribute To A Perfect Storm Of Digital Retail Payments In Asia Pacific
- Three Hurdles To Address Before Digital Retail Payments Can Scale Across Asia Pacific
- Seize Payment Innovation Opportunities By Delivering Value To All
Zhi-Ying and Meng are available for interviews and happy to discuss these topics in more detail.