Your Week InFinance

Finsia’s InFinance keeps you up-to-date and in-the-know. 

Banks could be losing their data advantage

by Matthew Smith | 17 May 2017

The process has begun to break open the banks’ monopoly on data, the latest recommendations to the government by the Productivity Commission, reveal. #4 Banks could be losing their data advantage

Released with little fanfare in the shadow of this year’s contentious federal budget, the Productivity Commission’s plans and recommendations represent a major step forward in the drawing up of the battle lines on data use.

This is the first story in a two-part series examining the Productivity Commission’s plans for data sharing and its effect on the banking industry.

What the Productivity Commission report outlines in its report is essentially a plan to enable individuals to exercise choice over how their data is used as well as to unlock individuals’ access to their own data sitting within government and the private sector.

The PC recommends new Commonwealth legislation in the form of the Data Sharing and Release Act.

It also recommends a National Data Custodian be set up to arbitrate how sharing of identifiable data between entities should be managed.

Fast but inevitable

While they haven’t come out and said it publicly yet, the country’s established financial institutions will view this as fast albeit inevitable progress towards an open data world where fintechs are on more equal footing to create innovative innovate products using clients’ transaction history currently locked up within the banks’ vast data rooms.

“Increased access to data can facilitate the development of ground-breaking new products and services that fundamentally transform everyday life,” the latest Productivity Commission report highlights.

Opening up access to consumer data was one of the big issues broached by members of parliament during the recent banking inquiries.

The point of contention – as outlined here recently by InFinance – was whether banks should be in control of the process of opening access to data, or whether the process be driven by the government.

“[Opening access to data] can certainly make the ability to provide credit in a more appropriate fashion, in terms of pricing, [so in that sense it’s] absolutely an opportunity… all we are saying is that it must be done where the risks are clearly identified and mitigated so that it protects our clients,” Anthony Cahill, NAB’s product & markets group executive, said at the time during the committee hearings.

The latest PC recommendations appear to recommend that the government take control of the process more in line the with the UK, where banks are required to open up their data in an appropriately regulated framework this year.

Next week InFinance will look into the risk-based framework for data sharing and release the Productivity Commission recommends to government.

Comments

Share this