What’s holding up open banking?
| Published date | 03 July 2023 |
| Author | Diana Clement |
| Publication title | Whanganui Chronicle |
The idea is the financial data that banks hold should belong to the customer, not the bank.
The customer should have the right to choose to give permission to third-party services to access their data.
That can make switching banks easier, or applying for mortgages and loans. Instead of sending over three months of bank statements to the new bank or lender, we simply give the other lender permission to access our data via a secure system.
Personally, I like the idea that open banking would allow us to give permission for third-party budgeting apps to access a person’s banking transactions automatically.
That makes budgeting easier, which in turn helps people manage their money better.
In the UK, which has had open banking for years, third-party companies offer services that use artificial intelligence to analyse a person’s bank transactions in order to provide advice on saving and investing.
Our banks say third-party apps that can access our online banking currently breach their terms and conditions.
Yet they opened their systems to Xero and MYOB to access data.
Then they complain that other third parties use screen scraping to access customers’ data.
At the moment the banks are pushing all the risk on to us if we use systems that can access our online banking. A good example is using Australia Post’s POLiPay, when paying for Air New Zealand airfares.
When you pay with POLiPay on the Air NZ website you are directed to a window that allows you to log into your banking and pay your airfare direct, thus avoiding credit card surcharges.
Technically you’re breaching your banking terms and conditions if you pay this way via the Air NZ website.
Banks in New Zealand have long dragged their feet or pulled the “too dangerous” card when it comes to open banking. Why is it dangerous in New Zealand but not in most of our banks’ parent country Australia, where open banking is already up and running?
More like they want to delay open banking because it allows nimble new market entrants to eat their lunch. It means they have less of a hold on customers who can use tools to better manage their money, which may reduce bank profits.
And of course open banking makes it easier to jump ship to a new bank.
The onus with open banking...
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