The hidden open banking gem in Scott Morrison’s Budget announcement

This week’s Federal Budget announcement - as it always does - caused a whole lot of controversy. But among talk of income tax cuts, changes to your superannuation and pension loan schemes, there was one hidden gem in Scott Morrison’s budget speech that has the fintech world talking.

It certainly didn’t dominate the headlines, so you’d be forgiven for missing out on the open banking news that came from the Treasurer’s Budget speech on Tuesday night.

“A strong economy also needs a strong, accountable and competitive 21st century banking and financial system,” Morrison said.

“In this Budget we are also moving forward with our Open Banking Regime and consumer data right, giving small businesses and households more control, more choice and better deals.”

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If you’re new to the open banking party, you’re probably wondering what ScoMo is on about right about now.

Well, under the proposed “Open Banking Regime”, Australian banking customers will be able to choose to share their consumer data with a range of potential providers, meaning greater access to the best-value financial products on the market.

Good news for banking consumers

There hasn’t been much of it lately with the Banking Royal Commission uncovering just how poorly some of our biggest banks have treated their customers, but the Government’s commitment to an open banking overhaul is certainly good news for the everyday Australian with a bank account.

FinTech Australia Chair Stuart Stoyan described the changes, which are set to begin rolling out from July next year, as a “game-changer for consumers.”

“Finally, customers will be able to use a regulated system to unlock the power of their own data to get access to financial services better tailored to their needs,” Stoyan said.

“Put simply, this means better customer outcomes.”

FinTech Australia - a national advocacy and support group for fintech companies across the country - also reported that the Government had opted to run with the timeline proposed by the Farrell report delivered in February this year.

What this means is that by July 2019, customers of the big four will be able to share their transaction, deposit and credit data with other financial services providers and mortgage data by February the following year. All other data will be available to be shared by July 2020.

Good news for small business, too

The Budget announcement featured a few goodies for small businesses, but cafe owners and boutique brewers may have glossed over the positive impacts an open banking system could deliver for them.

That wasn’t the case for online business banking lender, Spotcap who pointed out just how the changes could help smooth over some of the friction points in the everyday financial transactions that small businesses make.

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“It will allow us to innovate and develop new ways to help small businesses flourish and grow,” said Spotcap Australia and New Zealand Managing Director, Lachlan Heussler.

“We put the customer at the forefront of everything we do, and Open Banking will open the doors for us to help even more Aussie businesses gain access to much-needed capital to help them succeed.”

Greater consumer choice and increased financial innovation for small businesses are just some of the pros that advocates of an open banking model have been spruiking, but there’s a lot more you need to know. The good news is Mozo recently took a deep-dive on the subject and put together a handy open banking guide to help you get across the topic.