Macquarie’s move could be very disruptive

OPINION: By taking the lead in open banking data, Macquarie is in an enviable position to win a sizeable share of the lucrative retail banking market.

Macquarie Bank announced this week the launch of its new open banking platform, the first in Australia to give customers control over their everyday banking data and the power to securely manage how they want to share it.

This will be music to the ears of fintechs across the country. It also has significant benefits for the bank.

Trying to attract new customers and grow a retail banking business organically is a difficult exercise. The major banks still dominate, despite the poor satisfaction levels and widespread negative media attention they have received in recent years for a string of scandals.

The fact is, moving banks is a pain. Mortgages have traditionally been the key battleground for onboarding new customers, but even that process can be clunky and cumbersome.

Giving customers the ability to share their banking data (which they own anyway) with other service providers is a revolutionary way of winning new business.

Innovation in financial services has closely followed developments in mobile technology. Online tools and apps that help you track your spending, for example, are just some of the services that Macquarie Bank customers will be able to connect with.

Regular users of these apps will be more than a little intrigued by Macquarie’s announcement this week.

The lender’s open platform leverages Application Programming Interface (API) technology, which approved third-party providers can then connect into to offer new services and experiences.

The bank explained that “customers will have the option to securely connect their personal banking data such as transactions and home loan balances, as well as their business and wealth information, into third-party providers like budgeting apps and accounting software” to create their own personalised banking experience.

Any third-party provider who meets Macquarie’s open platform standards and security criteria can connect.

While the play for Macquarie is clear, this development will no doubt drive innovation and ongoing development of these third-party businesses.

Of course, there are significant security risks around apps that rely on a user’s personal banking information. Macquarie has acknowledged this, and stated that “consumers typically need to reveal their banking login details to use budgeting tools and similar services”.

However, the bank explained that its new platform will mean that customers will never need to give their login details to a third party.

Macquarie customers will be able to manage access to their data in real time though the bank’s app. Authorised third-party providers will have “read only” access to that customer’s data through a secure token, which then reads the data from Macquarie’s systems.

Building a retail banking solution around the customer may seem obvious, but in an environment where the biggest players often make decisions out of arrogance, rather than customer demand, Macquarie’s move is actually quite unique.

“Our customers have been telling us they want to securely connect their information into their favourite accounting software, budgeting app and other innovative services they’re interested in,” Macquarie’s head of personal banking, Ben Perham, said.

“We’ve built a highly personalised digital banking experience, so empowering our customers to securely manage how they want to use their own data is the logical next step.”

He added: “APIs are being used by leading digital companies like Amazon and Google to transform consumer experiences, and we’re excited about the opportunities the technology will bring to financial services.

“We’re looking forward to working with third-party providers and developers to drive new and more personalised solutions for our customers that tie in seamlessly with daily life.”

Macquarie is essentially following its customers, rather than directing them, and adapting its offering to meet the new order of everyday banking.

The group’s open banking platform is currently in pilot. It will be made available more broadly in the coming months.

[Related: Analysis: The financial services revolution]

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