Open Banking is Coming! What is Open Banking and How Will it Affect You?
Bank customers will soon have more ownership of their own transaction histories under the new open banking regime which comes into force in 2019.
Open banking will give you greater control of the data that banks and other financial institutions currently hold on you. Right now, it’s difficult for you to get a hold of your full financial data and for banks to send that data to each and to other companies. This makes it costly, difficult and time-consuming to find the best product or service for you, and also to switch to the product or service.
Open banking will allow you to direct your data to be sent to other banks, financial institutions and authorised organisations when you want to. You control who holds your data and how it is used.
This new right will improve consumers’ ability to compare and switch between goods and services on offer. Open banking will give banking customers greater access to the data their banks hold on them and the ability to direct that it be safely transferred to trusted and accredited service providers of their choice.
On the flip side, under the new scheme, banks will have the ability to access the financial data of anyone applying for a loan in a far more in-depth manner than at present. So, if you are thinking of applying for a home loan, examine your spending habits now and think carefully before you click that “Add to Cart” button!
In recent times, following the Royal Commission into banking, banks have adopted tougher lending requirements when assessing people applying for home loans. Banks are now under a lot more pressure to study in great detail the living expenses and spending habits of loan applicants. The proposed open banking scheme will soon enable banks to study peoples spending habits, including their digital spending more closely.
Banks already look at utility bills, grocery bills, education and medical expenses to name a few when assessing a persons’ ability to repay a loan. But under the new initiative, all of customers online spending habits will also be readily available for the bank to see.
A recent survey found Australians on average spent $46.54 per order on food delivery, with almost a third ordering it one night per week. This equates to $2420 on delivery annually, an amount that – if accurately assessed – could affect a home loan approval.
In a phased rollout, the big four major banks (CBA, WESTPAC, ANZ & NAB) will be required to make credit and debit card, deposit and transaction account data available by July 1 next year, and mortgages by February 1, 2020. Personal loans and all other banking data will be included from July 2020. All remaining banks and smaller lenders will have an extra 12 months for each phase.