Open Banking is part of the Consumer Data Right (CDR), developed by the Australian Government to give consumers more control over their data, enabling them to share it with accredited third parties for purposes such as personal finance management, and wealth and investment applications. 

Founder and CEO of Basiq, Damir Cuca, warns that businesses not already taking steps towards Open Banking are playing with fire and need to consider how they will future-proof themselves against disruptions to data connectivity.

“How would it impact your business if it was unable to connect to just one of the major banks? For many this would be seriously problematic. We are already aware of three major banks actively implementing measures preventing access to web-connected data,” said Damir.

Challenges with fraud

Financial institutions have rightfully introduced rigorous security measures to protect customers from a significant increase in fraudulent activity. Australian consumers and businesses lost more than A$2 billion to scams in 2021, more than double the $851 million reported lost in 2020 (ACCC). New protections, however, have reduced the availability of customer banking data via web connectors. 

Additionally, recent major data breaches have made consumers more vigilant when it comes to data sharing, increasing the risk to data access. Almost one-third of Australians report they have been exposed to a data breach in the previous 12 months (ANU). 

Damir says that industry has been able to develop workaround solutions so far, but as banks’ security measures become more sophisticated, fixes are becoming more difficult and not guaranteed.

“It is no longer efficient to continue band-aid fixing a degrading system when there is a better alternative for accessing banking data already available; for both businesses and consumers. We know banking web connectors are on their way out. This view was supported in the final paper from the Statutory Review of the CDR that recommended banning web connectors in the near future where the CDR is a viable alternative,” said Damir. 

Open Banking is here

“We want to make sure businesses are ready for when that time comes, especially taking into consideration the time it takes to become CDR accredited. It’s time to stop referring to Open Banking as a future state, because it is already here. The ecosystem is rapidly expanding and we can no longer rely on web connectors alone to access banking data.”

Basiq has developed a webpage to educate businesses on the progress of Open Banking, including comments from current users, and resources to help them make informed decisions about becoming accredited. 

“I hope this campaign will encourage others to commit to the future of data access in Australia and make the move. Not only to ensure the continuation of many Australian fintechs relying on banking data, but also to protect consumers and ensure they have choice and receive value from the data they create. Ultimately, Open Banking provides a more consistent and secure experience that will only continue to improve with time,” concluded Damir. 

For more information, visit the campaign homepage.