ARTICLE

Does your Digital Banking strategy tick all the boxes?

Open Banking today means different things to different people.

Open Banking drew global attention in 2016 as a direct result of the UK’s Competitions Market Authority announcing plans for the top 9 banks in the UK to deliver open source Application Programming Interfaces (APIs) for 3rd party use by January 2018.

Since then, Open Banking has been introduced in many countries around the world with varying regulatory and standardisation controls. In the UK the regulatory framework and cost of entry has seen significant shortcomings in the uptake of Open Banking.

Here in Australia, the government announced a review into Open Banking as part of 2017 Federal Budget. Open Banking legislation passed in August 2019. We should not be looking at the UK experience as one which will be replicated as there exists significant differences between the two markets which will see Australian banks and Financial Institutions approach Open Banking with a shift in mindset.

 

Open Banking in Australia is an industry-wide initiative and accounts for the full range of financial products including loans, mortgages and investments.

In Australia, payments are not part of the regulatory framework as the focus has been only on read access to the data.

A consistent authentication flow has been adopted by the Consumer Data Right (CDR) which requires a One Time Password (OTP) to be delivered to the consumer through existing and preferred channels. Strong Customer Authentication (SCA) in the UK has placed restrictions on banks and inhibited the customer experience.

The Open Banking Directory (OBD) in the UK regulates third party providers and account providers that operate in the Open Banking ecosystem. Regulated third party providers manage the digital certificates and software statements needed to connect to account providers using the Open Banking API Standards. In Australia, the Competition and Consumer Commission (ACCC) will
perform the role of the CDR Registrar. The CDR Registrar will maintain the Register of Accredited Persons (the Register) who have been accredited by the ACCC in its capacity as Data Recipient Accreditor. The ACCC Certificate Authority (CA), DigiCert, will issue and manage certificates to CDR participants as directed by the ACCC in its capacity as the CDR Registrar.


 

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