At Sibos 2018, bankers look to new partnerships to emerge from open banking, and Australia prepares for a related change in consumer data ground rules.
Sibos 2018, the global banking technology expo, was back in Sydney, Australia for the first time in a dozen years, and the evolution in payments in the intervening period is startling.
The opening plenary was fronted by Shayne Elliott, chief executive of ANZ Group, who suggested “partnering and opening up … as a business model” as the theme for Sibos 2018. Elliot sees real-time payments technology, including Australia’s eight-months-old New Payments Platform, as a key component of the bank of the future. Another is open banking: giving customers access to and direct ownership of their data. “When these two come together, we’ll see new revenue streams,” Elliott predicted.
These themes tied into a third strand that emerged from bankers’ comments: their fear of fintechs has unambiguously morphed into recognition that it’s better to co-operate than compete. “Collaboration between fintechs and banks could bring something more than either of them could offer separately,” Fabrice Denele, senior vice president for partnerships and interbank relationships and head of consumer solutions at Natixis, said at a panel discussion. The two will “find new ways to do business,” he predicted.
Other speakers were inclined to agree that a partnership model is the way forward. “The banks and the other financial institutions will figure out what is their sweet spot, what is the secret sauce that we bring to the table,” said Thomas Nielsen, chief digital officer of Deutsche Bank’s global transaction banking arm. “I think there’s plenty of room” for collaboration with fintechs. European banks now have little choice, with the EU’s Payment Services Directive 2 in place. PSD2 requires financial institutions serving European markets to allow third-party providers access to payments, customer transactions, and account data, once customer consent is given.
Sibos 2018 directed special attention to the emerging openbanking regime in Australia itself. Regulators there have been watching developments in Europe and the UK, and last year tapped Scott Farrell, a partner at major law firm King & Wood Mallesons, to lead a review of how an open banking regime might operate in Australia. Farrell’s report, presented last December, made 50 recommendations, all accepted by the Australian government.
Importantly, Farrell recommended government agencies run all aspects of the system, rather than allowing the banks to set their own rules. The report pushed for: a comprehensive education campaign to be delivered by all participants, including fintechs and government; access to data to require informed, explicit customer consent with the ability to opt out; the whole concept to be formally evaluated 12 months after commencement.
The first phase of open banking in Australia is scheduled to
begin in July 2019, with initial access limited to credit/debit
card, deposit and transaction account data from the major banks.
Implementing the first tranche of recommendations is likely to be
very tight, given that crucial new legislation is still being drafted,
as are some key data access standards.
In a panel discussion on “Open Banking Perspectives,” Farrell
explained that, in contrast to other jurisdictions, the introduction
of open banking in Australia is just the first of an ambitious set
of economy-wide changes. Banking is the first sector to which
Australia’s new Consumer Data Right initiative—giving consumers
more control of their data—is to be applied, with energy and
“The fact that open banking goes beyond the industry is
encouraging, as it allows industries to share data responsibly and
ultimately, perhaps, transform their business models,” said panelist
Nigel Dobson, banking services business domain lead at ANZ.
Open data elevates data to a level at or above money, he suggested.
“If you do that, it introduces the need for checks and balances
and security and liability,” said Dobson. “It does add friction to
the process. If you want assurance, you have to expect friction to
ensure confidence in the system. And to have the data economy
genuinely mature, there will be these steps.”