Damir Cuca, the founder of the nation’s largest fintech data sharing and insights company, has welcomed the government’s green light of “open banking” and played down the risk that the Facebook-Cambridge Analytica scandal could undermine greater sharing of customer data in years to come.
“Look at what happened with Facebook and how open banking is being approached – Facebook started in a dorm room and has just spawned and everyone just started sharing data. Open banking -- that’s not how it’s being approached,” said Mr Cuca, the chief executive of Basiq, a platform that provides access to financial institutions via application programming interfaces, or APIs.
“There’s a governing body, regulation, an accreditation process, we’re talking about standards…I think the real question is should companies have regulation when it comes to data access and so forth and all that? And I believe they should.”
As the government laid out how open data would be implemented, Mr Cuca said the collection of millions of Facebook users’ information by Cambridge Analytica – which has since ceased operations – had sharpened the public’s mind about the use of data.
In a joint submission to Treasury in March, the Financial Rights Legal Centre and Consumer Action Legal Centre warned the scandal – after data breaches at the likes of Equifax and Yahoo – had raised “public consciousness over the potential for data to be misused” and called for the “right to erasure” to be embedded within the open banking regime or risk undermining trust and confidence. Banks, including Westpac, have also backed open banking but cautioned around security, fraud and privacy risks.
Mr Cuca said the Facebook issues highlighted the need for education around open banking, but predicted it would ultimately “become the norm” given the benefits for consumers and lenders. Amid heightened focus on lending standards, he cited how banks would have better insight into customers’ spending and debts.
A year after committing to following other nations such as the UK and embracing open data, the government this week said it would be phased in from July 2019, in line with recommendations of a review conducted by King & Wood Mallesons partner Scott Farrell. It would pave the way for the roll out of the “consumer data right”, a general right recommended by the Productivity Commission slated to be introduced across the energy and telecommunications sector after open banking is bedded down.
The government labeled the timeframe “challenging but realistic”, arguing open banking could transform competition by giving customers the power to direct banks to pass on their data to “trusted and accredited” participants. The major banks will initially have to make data available on credit and debit cards, and deposit and transaction accounts by July 1, 2019, mortgages by February 1, 2020 and other products by July 2020. Other banks will have an extra 12 months for each phase.
The Australian Banking Association said the government’s announcement represented a “sensible path forward” for open banking and banks looked forward to seeing further details in the draft legislation “as soon as possible”. Fintech Australia, which represents financial technology companies such as Basiq, also welcomed the announcement, saying a “government-backed open banking framework will be a game-changer for consumers and businesses” and drive innovation.
Mr Cuca said while it would have been ideal to have all product data available at the same time, the green light was positive and the government appeared to have achieved a “middle ground” with the timeline. He said open banking would be a further “extension” of data enabled by the launch of internet banking in the 1990s, whereby consumers would not just access their data online but be able to transfer it to other accredited parties.
Basiq, which is backed by Westpac's venture capital fund Reinventure and also NAB Ventures, provides its fintech and banking customers with access to financial data and additional insights to assist with analytics.
“I think open banking…by accelerating it, we’re actually doing more to protect consumers data because open banking establishes a regulatory framework that says here’s how customer data needs to be handled, there’s an accreditation process attached to it…so the sooner we get there the better it is for the actual customers,” Mr Cuca said.
By Michael Bennet
Editor, Westpac Wire