ANZ Bank predicts first look at open banking laws around June

ANZ Bank is expecting to see open banking legislation introduced to parliament around June of this year.

Chief data officer Emma Gray told the bank’s own podcast that ANZ was already preparing for the arrival of the laws, though exact details of what they would contain is still the subject of discussions with government.

“We're expecting legislation in the June time frame,” Gray said.

“There are still some questions about the scope and the implementation timing of open banking as a first salvo to open data but I think a reasonable man would say within 18 months that we will be sharing some form of personal customer information.”

That timeframe would likely push the start of open banking back from mid-2019 - the earliest possible timing drawn from the government’s recent review - given the desire to give a year in which to comply.

Gray said there were still active discussions with government on whether banks may be able to recoup the costs of some data-sharing requirements.

“[One of] the things we’ve been talking with government about is around whether there should be some financial billing model for the banks in sharing the data,” she said.

“There’s a difference between a once-off ‘could you share my data with bank x and they might be able to offer me a better product or a better loan’ … [and] the ongoing and systematic sharing of data which has a cost to us.

“So there’s some discussion - and again we have to wait until the legislation comes - to see whether banks may be in some way reimbursed for the act of sharing data.”

Gray said that the costs would include KYC [know your customer] and authorisation processes that would need to be put in place to enable data transfers under an open banking regime.

They would also come from putting in place other core data infrastructure to enable sharing between banks and others.

In February, ANZ Bank made “a strategic investment and partnership with Data Republic” to kick start some of its infrastructure preparations, though Gray noted more was likely required.

“The innovation and customer proposition that’s going to be required for us to do well in the open banking arena is something that we need the technology and partnerships to enable, and this is a great plank in that,” she said.

“But there’s a lot of potential opportunities on the table that we’re not even sure of yet.

“As the economy faces into open banking and actually open data more broadly, there’s a lot of infrastructure that needs to get built.”

Gray said that banks needed to ensure the infrastructure was capable of two-way communication of data.

“We need to be able to share the data with the customer and their designated recipient,” she said.

“But secondly, to avoid becoming a dumb pipe, we also need to be in a position to receive that data back in in a couple of different ways.”

The bank was concerned not just about the possibility of customers using data to switch between providers, but at how hyperscale web providers might thrive in an open banking world.

“We need to put ourselves in the position of being an Amazon or Facebook and say ‘if we had the data we have and then we also got some of the customer’s financial data, how quickly can we provide them with a really compelling alternative to some of the products and services they currently get from a bank?’,” Gray said.

“We need to inject a level of urgency into the team’s thinking, which says ‘we are used to the data we see today but we are not necessarily across or aware of the vast and deep pools of data that some of our new competitors have’ which allow them to be at the 80 percent confidence [level] of what they offer to our customers today.  

“Getting ready for that requires us to start thinking now and putting plans in place now.”

Gray said that banks that did not adapt well to open banking and data regimes could struggle to “survive” and “grow their customer bases” in the future.

Much of the success or failure of institutions would come down to how well they can serve existing customers “by knowing more about them”.

“I do believe the banks that emerge from open banking [and] open data ... will be those that are passionate about their customers and can serve them with fantastic propositions,” Gray added.