‘Open Banking’ is now officially upon us. But what does that mean and why should you care? Well, in a nutshell, it’ll be easier and quicker for you to get a better deal on banking products going forward.
With all that’s going on in the world right now, it’s been interesting to see one of the nation’s biggest banking overhauls in recent memory slip a little under the radar.
The legislation came into effect on July 1 that’ll make it easier and more convenient for you to switch banks when you’ve found a better deal on a financial product.
It’s called ‘Open Banking’, and it will allow you to easily share your banking data with your bank’s competitors in order to access more personalised and competitive financial products and services.
Now, on the face of it, this can sound a little off-putting. After all, it’s being drummed into us to protect our data as much as possible these days.
But the good news is that Open Banking keeps the power in your hands: you can choose who to securely share your data with, and when.
How Open Banking changes the current system
Nowadays, most of the transactions you make are done so online.
For example, you likely get paid electronically, you pay your bills online, and you buy most things using a debit or credit card that’s recorded by your bank online.
Now, every time one of those transactions takes place it creates data.
This data is then collected by your bank, stored, and used to understand you better and create products and services that you might like.
This kind of insight gives your bank the inside lane when it comes to securing you as a customer.
Now, let’s say another financial institution offering a financial product, such as a home loan, catches your interest.
This financial institution likely knows very little, if anything, about you.
To find out more about you, and what they can offer you, you’d need to complete quite a bit of paperwork work them.
That includes detailed information on what you earn, what you owe, what you spend, and where you spend it – it can be pretty darn time-consuming.
But imagine if all you had to do is give that new financial institution permission to access the data your current bank already has.
Well, that’s Open Banking. It gives you the power to control who you securely share your data with and how it can be used.
Rolling it out in stages
The Open Banking system will start small but will ramp up over time.
At present, all four major banks are now capable of sharing your data – if you request it – while smaller financial institutions will join over the coming year.
At this stage, however, you can only request that your bank share your deposit and transaction account data, as well as your credit and debit card data, to financial institutions that the ACCC have authorised to receive it.
From November 1 you’ll also be able to share data relating to home loans, investment loans, personal loans and joint accounts.
“This gives consumers control over information banks already collect about them,” explains ACCC Commissioner Sarah Court said.
“Importantly, it allows consumers to share that data with other businesses, such as fintech, that may be able to provide them with more personalised services and competitive offers.”
By the end of the year, the ACCC anticipates there will be dozens of financial companies accredited – meaning more companies battling it out to provide you with the best deal they can.
For open broking, get in touch
Now, it’s important to note that you don’t have to wait until Open Banking is in full swing before checking whether you can apply for a better deal on your home loan.
As you know, we’re always here to take the legwork out of the process for you.
So if you’re overdue for a home loan health check then get in touch today – we’d love to help you out!