When is the right time to go live with open banking in Australia?

A guide to help you work out if your business and its systems are ready for open banking.

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Choosing when to go to live with open banking in Australia is about timing: the right time is when the data useful for your use case is available. In other words, are you ready and are the systems you will need to use ready? Phase three of the open banking rollout is when all accounts should be available, but exemptions for Data Holders are still playing out as banks and other Authorised Depository Institutions (ADIs) work through technology and other issues – past the July 1, 2021 deadline for those participants to be fully registered with Consumer Data Right (CDR) regulations.

The right time to launch depends on your use case

To ensure you launch your use case at a time when it will be able to draw enough data from Data Holders to be useful for your customers, there are several questions you must ask:
  • Are banks (Data Holders) connected?
  • Are your customers' accounts available? For example, joint account access to open banking won't be finalised until April 2022, making Q2 of 2022 the moment when all access issues within Australian open banking are resolved.
  • And how will you access the data? Via screen scraping initially or will you directly enter the open banking system?

How mature are you with open banking today?

If you are already using screen scraping – where a customer hands over their login details to a business which then copies the data directly – you already have a use case and are ready to move to open banking as you're simply replacing one set of data with another. If you're new to open banking, now is the time to be thinking about the types of use cases that might be appropriate for your business and customers, but also other critical elements that will determine when you go live.

Is open banking aligned with your business?

Open banking can create enormous benefits for customers, but only if it's aligned with their needs and those of your business. Discovering strong use cases is the first step to finding out whether open banking data will offer you an advantage over your competitors, as will understanding your data maturity. The types of questions to ask when considering whether open banking is aligned with your business and how you go to market are:
  • Do your customers expect you to access open banking data? This may mean you need to become fully accredited.
  • What kind of data do you need to access? This may mean you can partner with an Accredited Data Recipient (ADR) like TrueLayer which can handle data collection and consent requirements, and support you with compliance.

Is it too early to launch with open banking?

Open banking in Australia crossed a critical milestone on July 1, 2021, when all banks and Authorised Depository Institutions (ADIs) were supposed to be registered as Data Holders. However, many have exemptions so they can work through technology and other issues before becoming fully operational. With Phase 2 of the rollout set for November 1, 2021 and the final Phase 3 set for February Data Holders and greater customer understanding means the optimal time to go to market with open banking data will be in the second quarter of 2022, after the rollout is complete and details are resolved such as how joint accounts will work.

When, in the open banking phased rollout, is the right time to go live?

The phased timetable is key to knowing when the best time to go to market with open banking for your business will be. But it will also be guided by the maturity of several critical elements such as connectivity and conversion rates, or the number of customers who begin to use open banking.From July 1, 2021, Accredited Data Recipients (ADRs) can offer services around savings accounts, call accounts, term deposits, current accounts, cheque accounts, debit card accounts, transaction accounts, personal basic accounts, gst and tax accounts, credit and charge cards (personal & business).From November 1, 2021, that extends to products home loan, personal loan, and mortgage offset accounts. From February 1, 2022, ADRs will be able to design products and services around data released in the third and final phase of the rollout, which adds business finance, investment loan, lines of credit (personal & business), overdrafts (personal & business), asset finance (including leases), cash management accounts, farm management accounts, pensioner deeming accounts, retirement savings accounts, trust accounts, foreign currency accounts, and consumer leases. Alongside this rollout Treasury is also resolving data access bottlenecks by clarifying new ways to access open banking data, such as through a sponsor-affiliate model, and how joint accounts will fit into the scheme. These are expected to be resolved by the second quarter of 2022.

How ready is the open banking infrastructure in Australia?

Deciding on your optimal time to go live with open banking is just as dependent on two outside factors as your internal readiness: connectivity and conversion. You, as an open banking participant, need high connectivity with Data Holders, but also high quality open banking user journeys.ConnectivityBusinesses looking to benefit from open banking need banks and other Data Holders to be ready to connect to their secure APIs (application programming interface – the software that connects your system to others' in the open banking scheme). That means both banks and the account types need to be available in order to optimise your use case. For example, SMEs often rely on joint accounts so if you are targeting these businesses with your use case, you will need to wait until after April 2022 to hit 'go' on your API.ConversionConversion is critical: you could have complete connectivity with all the Data Holders you need, but if APIs aren't reliable or the customer experience is bad, you will have low conversion rates -- the number of people who successfully connect their accounts with your use case. TrueLayer's years of experience in the UK and Europe show that creating a reliable API that is convenient, simple to use, intuitive and includes obvious messaging about its security are critical design factors to lift conversion rates.The side of the journey the merchant can control is around the design of the customer experience. It relates to creating a journey for the consumer that reduces friction to a minimum, such as asking repeat users the same questions as first-time users, testing to make sure the API is as free of bugs as possible, and using common patterns such as placing the select item/amount element before bank selection.The other side of the user journey is that of the Data Holders, as they control how a consumer is asked to authenticate their permissions once a request is sent. For example, in the UK biometric authentication massively improved the user experience and therefore conversion rates, but a regulatory requirement to "re-authenticate" every 90 days has undermined the usefulness of open banking for consumers.In Australia, the Data Holder consent journey is standardised, meaning they must provide a consistent experience for all consumers. Furthermore, currently the only way to authenticate identity is via the consumer's online banking login and a one-time password, and consumers can consent to accessing their data for up to 12 months.

Your open banking checklist: are you technically ready?

To understand if your business is ready to use open banking, answer these key questions: Is your business environment prepared for the requirements of handling open banking data?
  • You have people who fit the fit and proper persons criteria
  • You have insurance
  • You are a member of an external dispute resolution scheme
  • You have internal dispute processes set up
Does your business have the technical capacity to handle open banking data?
  • You have open banking infrastructure, or access to an open banking platform, that will allow you to connect securely to Data Holder APIs
  • You have the right Information Security and Controls in place
  • You can meet CDR regulations around handling consumer data and consent management
Find more information on the process and readiness assessments

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