Australia’s open banking regulatory framework, consumer data rights (CDR), since its launch in Jul ’20, has made considerable progress in the banking sector, with the energy and communication sector to follow. CDR is an opt-in service for the customer upon consent. Data providers, accredited data recipients, and data holders, including banking and non-banking data providers covering telco, energy, insurance, wealth, superannuation, trading, and many more, are imperative to creating a truly open financial ecosystem. Several insights can be derived from shared data, providing a deeper understanding of customers’ financials and spending behaviors.
Unlocking Open banking in Australia
Australian treasury is considering enhancing the CDR to empower customers to use it to switch banking providers, utilities, and communications. A new CDR access model called ‘Action initiation’ rollout would enable such service provider switching features, creating a competitive market in Australia.
The current access models – ADRs and Principal/representative provides read access which means banks and non-banks can use data upon customer consent to provide better deals. As per the CDR register, several data holders and data recipients in Australia are engaged in active, compliant data sharing. This list is growing, with many non-bank entities participating either through full Accreditation or as ‘Representative’ with a Principal provider.
Exhibit 1: Australian CDR insight
Open banking use cases
Current scope CDR regulations enable entities (banks and non-banks) to offer efficiency, faster processing, and better customer experiences. Some of the use cases are discussed below.
Open banking APIs provide efficiency in the know your customer (KYC) process, empowering organizations to retrieve customer information – name, surname, date of birth, and address. Verify and validate the source of finance or bank information. Use transactional data to support AML, fraud analysis, and draw reports on document verification.
Exhibit 2: KYC Workflow
Open banking APIs provide faster processing in the income verification process by retrieving account information – account number, name, sort code, and others. Verify and validate account balances. Use transactional data to categorize and Identify income sources.
Exhibit 3: Income verification workflow
Auto form fill
Open banking APIs provide a better experience in the form filling process by retrieving personal & account information – name, surname, date of birth, address, account number, account name, and others. Optimize application forms across the line of businesses and use data to autofill forms.
Exhibit 4: Auto Form fill workflow
In the subsequent blog on open banking, we plan to expand on more industry use cases, and explore pivotal open banking fintech and open banking roadmap for banks and non-banks.
To summarize, the open finance ecosystem transforms how customers interact with their finances. The ecosystem also transforms organizations’ internal processes for faster, better, and more efficient services. Open banking also enables partnerships with platform providers, data integrators, and third-party fintech for rapid time to market propositions.
We at Infosys Consulting can provide a guided approach and implementation capabilities on more than 100+ open banking use cases.
Lokesh joined Infosys Consulting in 2020. He has over 20 years of experience in industries ranging from financial services, utilities, mining, and telecom across Australia, the UK, and the US. He has led data strategy and Cloud transformation engagements across many industries. He is passionate about fintech and emerging technologies. At Infosys he works with our banking clients, enabling insight-led intervention to improve organizational innovation and business outcomes.