Australian FinTechs have welcomed the latest expansion of Australia’s data portability scheme which will allow companies to act on behalf of consumers in certain situations like making payments, opening accounts and applying for loans.
The changes were proposed nearly a year ago after a lengthy review of Australia’s Consumer Data Right (CDR) by one of its original architects, but were only endorsed by the government last week.
The government accepted 94 of King & Wood Mallesons partner Scott Farrell’s 100 recommendations to improve the economy-wide data sharing scheme, and is now planning more consultation with stakeholders for a roadmap on implementation.
FinTech Australia chair Simone Joyce said the government endorsement was a relief for the FinTech community and, along with a new tiered accreditation system and other payment regulation changes, should see the scheme open up more quickly after a slower than expected roll out since official launch two years ago.
“FinTech Australia members, by and large, were extremely relieved and pleased to see the government so willing to adopt, 94 per cent of the recommendations in Future Directions report, simply because a lot of them were made with the view of supporting innovation in Australia or around CDR,” she told InnovationAus.
The latest CDR changes will introduce action initiation to the scheme, allowing third parties to act on behalf of consumers and share their data with permission.
To open banking first, the feature will allow third party payment initiation, and is expected to create several new market opportunities for accredited data holders and recipients. It also bring Australia in line with the UK’s open banking system, considered a global leader.
The government endorsement of action initiation follows a recent payment regulation review which Ms Joyce says will work together to open up data sharing and innovative new applications.
“Those things really work together to make sure that we do have access to things like that action and payment initiation, which a lot of FinTechs are really asking for.”
Ms Joyce is also founder and chief executive of Paypa Plane, a Brisbane-based payments system.
One example provided by the Ms Joyce is consumers being able to set up a payments or account switching based on changes in rates, all without their direct involvement after providing initial consent.
“Essentially, it allows companies to build what you could call a financial concierge. Consumers can set up scenarios and allow it to happen automatically while they’re asleep,” Ms Joyce said.
In its response to the CDR review, the federal government promised privacy and security safeguards will accompany the new action initiation capabilities.
The government agreed that If initiations are undertaken by accredited third parties without permission consumers will have a right to take action against them. Offenders will also be liable for civil penalties and expulsion and a loss of CDR accreditation if acting without permission.
Existing consumer protections of CDR will also be applied to action initiation capabilities and the government agreed higher standards of efficiency, honesty and fairness will be considered for certain sectors or applications of action initiation.
Ms Joyce expects the latest changes will be more favourable to FinTechs under the expanding open banking system, predicting they will have a “huge advantage” over big banks with action initiation.
“Traditionally were a little bit closer to the consumer we can move more quickly to update and offer different services,” Ms Joyce said.
“And we tend to be really laser focused on the product that we’re bringing to market. We don’t have multiple things that we’re trying to do all at once. So we can be really, really good at the thing that we set out to do.”
With an election looming early next year the FinTech Australia chair said she is confident CDR has bipartisan support and that momentum can be sustained, but acknowledged the roll out so far has been slower than many were expecting.
“There has been the language used that this is not a partisan issue, this is something that is good for Australia. It would be really good to make sure that [CDR] did get appropriate resources and support no matter what happens after the election, so that we don’t have any downtime or loss of momentum.”
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