CBA is hoping the Australian Taxation Office will allow individuals to consent to “one-off sharing” of their tax data when applying for a loan, backing an idea first raised by Macquarie.
Macquarie’s personal banking arm raised the idea in August last year to help it meet responsible lending requirements.
The Australian Financial Review reported that ATO data could help banks cross-check what loan applicants told them - and catch instances where applicants over-estimated their income to secure larger loans than they could service.
In a submission [pdf] to a senate inquiry on regulatory and financial technology, CBA backed the idea, saying “one-off” sharing of tax data could make loan approval processes faster while “reducing errors”.
“To the extent Government can make more of the data it holds available to citizens for legitimate purposes, either through giving individuals the opportunity to share their own data more readily with private sector entities, or by making large anonymised data sets publicly available, this should be encouraged,” CBA said.
“As one example, allowing individuals to authorise a one-off sharing of certain data sets from the ATO with banks when they are applying for loans would significantly reduce the time taken for loan approvals, while also reducing errors.
“This data could be encrypted via an independent intermediary so that the bank had access only to relevant data elements.”
Banks are currently building systems that will enable customers to grant one-off sharing of financial data with third parties, such as fintechs and other organisations.
The first of these data-sharing arrangements take effect from July, with an expansion to other types of data in November.
CBA said it is continuing “to progress its implementation program” but said the benefits of open banking would only be fully realised “when we bring together information from across multiple industries.”
“We know that in an open banking environment, trust and security are more important than ever,” it said.
“Australians expect major banks to be trusted custodians of data, and we continue to invest extensively in market leading security.
“Well implemented, open banking can actually enhance the security of data by ensuring that data sharing takes place in a safe and well-regulated manner.”