What’s the difference anyway? Comparing open banking in the UK to Australia
One of the main questions we get asked by our UK clients is: “So how, exactly, is open banking different in other parts of the world?”
In the second part of our series on open banking in Australia, we’d like to take you through some of the concrete differences compared to the UK. This guide may inform whether either is a ripe market for you to tackle — whichever way you’re going! If your ambitions span these regions, we’d love to talk to you 🚀.
A cheat sheet to impress ✨Before we dive in, here’s a cheat sheet to the jargon:
What’s similar?1. “Regulated, Standardised, Mandatory”If Stevie Wonder wrote a song about open banking, this would be its title. You may argue it’s not got the same flow as the original, but… you’d be right.Bad jokes aside, in both markets:
- The ecosystem and its key participants are regulated,
- The way for banks and third parties to connect is standardised, and
- The provision of these connections from the holders of the data is mandatory.
- A central authority: gives out the ‘keys to the castle’ 🔑
- A register of some sort: keeps track of who has access 🚪
- A trusted certificate provider: issues certificates as per agreed technology standards ✔️
- The certificates themselves: used by the parties in the system to identify each other and decide whether a connection should happen 📃
What’s different?1. The trigger for needing a license is differentMany of our clients ask, “Do I need to be regulated to operate in Australia or in the UK?”.A disclaimer: please get your own legal advice 😇. This is an overview of what we know about the triggers in regulation today.In the UK, under the Payment Services Regulations 2017 (PSRs 2017), you need a license from the FCA if you are providing Account Information Services or Payment Initiation Services. These are defined in the Interpretation section of the PSRs 2017. At a high level:
- An account information service is an online service to present consolidated information on payment accounts (in its original or processed form) back to the payment service user and other persons if instructed by the payment service user;
- A payment initiation service is an online service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider.
3. The UK’s got the lead on paymentsAustralia’s ambitions on data are bold. However, the Consumer Data Right (“CDR”) does not cover ‘write access’ or payment initiation — which is an area we are seeing develop rapidly in the UK.The journeys our partners are building with our Payments API are proof of the potential that awaits. Companies like Stake and Plum are innovating at the bleeding edge of payments. We expect and hope to see future iterations of the CDR introduce similar concepts, which are agnostic of the underlying payment rails and schemes.