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, wasback in Sydney, Australia for the first time in a dozenyears, and the evolution in payments in the interveningperiod is startling.
The opening plenary was fronted by Shayne Elliott,chief executive of ANZ Group, who suggested “partnering andopening up … as a business model” as the theme for Sibos 2018.Elliot sees real-time payments technology, including Australia’seight-months-old New Payments Platform, as a key component ofthe bank of the future. Another is open banking: giving customersaccess to and direct ownership of their data. “When these twocome 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 morphedinto recognition that it’s better to co-operate than compete.“Collaboration between fintechs and banks could bring somethingmore than either of them could offer separately,” Fabrice Denele,senior vice president for partnerships and interbank relationshipsand 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 modelis the way forward. “The banks and the other financial institutionswill figure out what is their sweet spot, what is the secret sauce thatwe bring to the table,” said Thomas Nielsen, chief digital officer ofDeutsche Bank’s global transaction banking arm. “I think there’splenty of room” for collaboration with fintechs.European banks now have little choice, with the EU’s PaymentServices Directive 2 in place. PSD2 requires financial institutionsserving European markets to allow third-party providers access topayments, customer transactions, and account data, once customerconsent is given.
Sibos 2018 directed special attention to the emerging openbankingregime in Australia itself. Regulators there have beenwatching developments in Europe and the UK, and last year tappedScott Farrell, a partner at major law firm King & Wood Mallesons,to lead a review of how an open banking regime might operatein Australia. Farrell’s report, presented last December, made 50recommendations, all accepted by the Australian government.
Importantly, Farrell recommended government agencies run allaspects of the system, rather than allowing the banks to set theirown rules. The report pushed for: a comprehensive educationcampaign to be delivered by all participants, including fintechs andgovernment; access to data to require informed, explicit customerconsent with the ability to opt out; the whole concept to be formallyevaluated 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.”