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In a submission to the Productivity Commission inquiry into Data Availability and Use, EFTPOS provider Tyro Payments said Australia must move quickly on its data rules if it wants to become a global fintech hub.
Tyro co-founder Andrew Rothwell said the UK and the European Union are “well advanced” when it comes to open data and open API (application programming interface), while Australian is “lagging behind”.
“If Australia is late in delivering open data and open API reforms in this country, the fintech revolution will take place elsewhere,” Mr Rothwell said.
“Customers are currently being locked out of financial services products and solutions such as alternative lenders or comparison, advisory, financial management and payment services that are designed specifically to meet their needs by innovators who can deliver.”
Mr Rothwell said customer transaction data “belongs to the customer”.
“Banks should be forced to give their customers the right and the ability to share that data with third parties that are licensed under the APRA or who have an Australian Financial Services licence or an Australian credit licence,” he said.
“By refusing to allow customers to make their data and accounts available to regulated third parties, banks will continue to control the snail’s pace of innovation in Australia, to the detriment of the Australian consumer.”
Banks would not necessarily be the losers from a more open data world, Mr Rothwell said. In fact, it could enable them to become more of a ‘platform’ for other services.
“Once fintech innovators have been granted permission to analyse, integrate and share data as consumers see fit, they will unleash a vast wave of new products that will give consumers more choice, while increasing the value of their existing products,” he said.
“This industry is going to revolutionise how consumers and businesses interact in the future... If Australia is going to become the next fintech hub of Asia, that revolution needs to happen here."
The Deloitte Australian Mortgage Report 2016 released earlier this year asked a panel of mortgage lenders where the next phase of innovation will come from.
Macquarie Bank executive director Frank Ganis, who participated in the report, said digital technology was critical for every business with grow aspirations.
He pointed to offshore markets, where online mortgage distribution channels have been more effective.
“Having spent a fair bit of time working and reviewing a number of offshore markets and experiencing scenarios when borrowers could complete the process of application, valuation, contract execution and settlement of a loan in a short time frame of just hours, there are challenges which would need to be overcome before this could be applied to our market,” Mr Ganis said.
He said lenders needed to be in a position to “push and pull information digitally, effectively and efficiently with customers or they risk being left behind”.
“For example, Quicken is regularly highlighted as being potentially the fastest-growing mortgage business in the US. But ... it benefits from a competent group of professional sales and service executives who personally support the digital footprint and activities of the business.
“The combination of digital supported by the ‘human touch’ is why the Quicken offering is so compelling.”
In the UK, major banks have been able to harness the power of customer data to deliver pre-approvals on unsecured loans without customers having to apply.
Former Barclays CEO of mortgages Steve Weston told an FBAA event in Sydney last month the bank was able to tell six million customers how much they could borrow, up to the equivalent of $100,000 unsecured, and at what interest rate – without their having to apply.
“We knew enough about them from their credit bureau scores and their transactional banking that we could make those decisions. That’s going to move right across the world. It will happen here in Australia as well,” Mr Weston said.
He said that while brokers did not need to be concerned about this, they should acknowledge that their roles would change.
“It will become less about testing affordability and more about advice and the value add that you can provide.”
[Related: Banks now 'unquestionably strong': APRA]