Australia’s impending Consumer Data Right an ‘ambitious policy’

Speaking with Mortgage Business, Ross Sharrott, the CTO of data aggregation and portability platform Moneytree, noted that unlike the United Kingdom’s open data model, which specifically applies to the banking industry, Australia’s intention is to introduce a framework that supports economy-wide open data, starting with banking.

“The Consumer Data Right is about identifying that the data you hold as a custodian belongs to the consumer, and [about] creating a data economy, if you will, that will grow the Australian economy in a broad sense,” Mr Sharrott said.

“Obviously, there is going to be quite a long process in making every industry in Australia be open, but it’s definitely a more ambitious policy objective than you see in the UK or in Japan, at least as it’s been expressed.”

The Moneytree CTO, who is part of the Data Standards Body’s advisory committee (along with representatives from the major banks, fintechs and advocacy bodies), noted that Australia will be drawing inspiration from the UK, which started rolling out access to banking data under a mandated open banking standard last year.

He expects that the advisory committee, which had its first meeting in Sydney this week, will be considering which aspects of the UK model are appropriate and replicable in Australia in upcoming meetings.

Mr Sharrott believes that one challenge will be figuring out the “interplay between those different regulators and different rules” that apply to highly regulated entities, including how to generate standards that “threads that needle effectively”.

“Having the UK [model] as a base standard helps to short-circuit a little bit of that,” the CTO added.

Submissions from financial services entities to the government’s review into open banking in Australia included a wide a range of recommendations, such as charging fees for access to data, introducing a liability regime in the event of data breaches and establishing strong data privacy and security standards.

From Moneytree’s perspective, Mr Sharrott said that it’s particularly important that a “customer-centric” open data framework is introduced.

The six-year-old Tokyo-headquartered fintech had last year suggested in its submission to the government’s open banking review that customers should be able to explicitly opt in at all points of a product or service life cycle. They should also be able to opt out via the service where the data was first shared, rather than having to chase up multiple “partner” companies who subsequently have access to the data.

“Consumers need to trust what’s going to happen in open banking in order for them to want to use it. We think it’s really important to be transparent and clear about how data is moving and why, and also be very explicit in the consent model so that the consumer is in charge of that moment when their data moves and has a clear understanding of from who to whom and why,” the CTO told Mortgage Business.

Moneytree further recommended that privacy policies be written “in the language of users, not legalese”, and that real-time notifications be sent to customers about any material updates to privacy policies.

The fintech, which launched in Australia last year, has a keen interest in the impending open banking regime as it would support its own business model, Mr Sharrott said.

“We’re committed to our business here in Australia, which is why we’re spending time working with this committee and we’re looking to establish partnerships throughout the Australian ecosystem. Open data is an area where we believe our technology and our platform will thrive,” the CTO said.

The fintech’s consent-based data aggregation and sharing platform, LINK, provides financial institutions with API access to thousands of data sources in Japan, and the company is currently building up its partner network in Australia, though Mr Sharrott was not able to disclose at this stage which financial institutions it is working with.

Moneytree’s technology is embedded into a user’s mobile banking app and the user has control over what information is drawn from third-party data sources and from which third parties. Additionally, the user determines whether their financial institutions get one-time access or ongoing access to data sources, with the ability to switch access on and off at any time with swipes.

Crucially, Mr Sharrott said that the customer’s data is not sold to third parties for targeted marketing or advertising (something that many Australians have voiced concern over), which is something Moneytree had recommended to the government last year, saying that the sale of customer data should be avoided.

However, in cases where businesses are inclined to monetise customer data by selling it to third parties, the fintech suggested they be required to inform customers exactly to whom their data has been sold and the purpose for which the data will be used.

The CTO believes that one of the most “exciting” things about the impending regime, which is slated to come into effect on 1 July 2019, is that it will pave the way for innovations that are yet to be conceived.

“From our perspective, we think [open banking] is largely going to be in line with our current business, which is already helping consumers bring their data into one place so that they get a complete financial picture. [The open banking regime] should simplify that process for us, but then allow more exciting use cases in the future,” Mr Sharrott said.

“I think in the near term, it’s going to be about convenience, so things that are currently a little bit clunky and difficult [to use] will get more convenient… so uses cases [like where someone] would like to open a new account and [they can] pull some data that [they] need from various places more easily.”

He believes that more uses cases around “doing some of your financial grooming automatically and more efficiently” will emerge in the second stage of the regime, followed by unforeseen innovations in the succeeding stages.

According to Mr Sharrott, there are also other commercial advantages to making data shareable: businesses get access to not only larger volume of data but also more up-to-date data; the customer onboarding process can be “smoothed out”; and banks can develop ecosystems where businesses build on top of their APIs, potentially adding new revenue streams.

[Related: Open data will give mortgagors more power: uno]