Small ADIs slow to provide open banking data

John Kavanagh

Australia’s open banking system took a big step forward on July 1, when non-major ADIs were required join the big banks in making their consumer data available to customers and their accredited data recipients. Unfortunately, it has turned out to be not much of a step forward at all.

“Phase 1” consumer data must be shared by non-major ADIs from July 1. This includes transaction, at-call savings and term deposit accounts, cheque accounts, personal credit and charge card accounts and business credit or charge card accounts.

They will have to start sharing phase 2 data from November 1. This includes residential home loans, investment property loans, mortgage offset accounts and personal loans.

According to data provided by the Australian Competition and Consumer Commission, at the end of July there were 55 ADIs “not providing the required service” and not having been given an exemption. Five have become data providers in the meantime.

Some of the names on the list include Bank Australia, Bank of Queensland, ING Bank (Australia), PayPal Australia, Rabobank Australia and Teachers Mutual Bank (and associated brands).

All the institutions listed have given the ACCC “proposed resolution dates” but some go into 2022. Australian Unity Bank expects to be compliant in July 2022 – a year late.

In addition to the non-compliant ADIs, the ACCC has granted exemptions to 41 institutions in relation to some or all of their data sharing obligations.

That leaves just 24 of more than 80 licensed ADIs currently providing some or all of the required data sharing services.

The Consumer Data Right rules give the ACCC power to take enforcement action, including issuing infringement notices, court enforceable undertakings, suspension or revocation of accreditation and court proceedings.

The regulator has not yet signalled how tough it plans to be in policing compliance with a regime that is clearly struggling to get buy-in from the industry.

The chief customer officer at financial software company Biza.io, Mark Perry, said a lot of ADIs underestimated the effort required to participate in open banking.

Perry said: “In some cases they are working with core banking vendors that have also underestimated the task. It has not helped that the Australian government specifications are highly customised, which means banks and their software providers can’t use off the shelf solutions.”

The chief executive of accredited data recipient Frollo, Gareth Gumbley, agreed: “Getting all the data in one place and making it available is a big job, which is made more difficult if financial institutions are using old versions of their banking software.”