Q: Why do you think there is a need for financial data aggregators today?
A: Consumers are seeking better understanding and control over their finances, which ultimately helps them to make better decisions and be better off. Data aggregators facilitate this by giving people a complete view of their finances.
Having access to their entire financial history means consumers can use that history to their advantage. For example, consumers may use their financial history to apply for new products and services or seek better terms. Financial aggregators are able to combine information from various financial institutions whose systems do not talk to each other and provide an automatic, complete financial history for consumers.
Q: Can you explain open banking and describe what an open banking world would look like in Australia?
A: Open banking refers to the use of technology to enable financial institutions such as banks and other parties, such as fintechs, to share data between themselves at consumers’ direction.
The Federal Government is proposing to establish a Consumer Data Right (CDR). The CDR will be the foundation of open banking by making it law that the data an institution holds on an individual belongs to that individual.
According to the current schedule, the first CDR standards will be agreed by the Data Standards Body later this year and the open banking framework should be set to start in mid-2019.
In Australia, this will create an environment where consumers have control of their financial data, and both consumers and financial institutions are capable of exchanging information easily and securely. This will also create opportunities for financial institutions to facilitate innovations in customer experience, particularly when onboarding for financial products and services.
By introducing a framework that supports economy-wide open data and data sharing, opportunities are presented for fintechs to partner with, and support, financial institutions to thrive in the new world of open banking.
The first industry in which the CDR will be implemented is banking, but other industries will follow in the future. In fact, companies from other sectors like superannuation and wealth management are already moving in this direction. It won’t be long until we start talking about open super, open wealth or open insurance, and this could happen long before the CDR becomes mandatory in these industries.
Q: How can super funds work with financial data aggregators to benefit members?
A: We believe member engagement can be improved by addressing a core problem – the ‘fragmentation’ of Australians’ financial lives and the lack of visibility they have over their entire finances in real time. In this way, financial data aggregators have developed an approach in which people can have full oversight of their entire financial situation.
Super funds can work with aggregators on many different levels in a way that provides helpful benefits to members. For example, this type of partnership can facilitate a smoother onboarding process for members when joining a new super fund. Another example is fund consolidation; as many consumers simply accept their new employer’s default super fund because they don’t know the details of their previous one, financial data aggregators can help increase member retention for existing super funds.
A third example of how super funds and aggregators can work together to benefit members could be implementing a salary sacrifice calculator to help members understand how their actions affect their retirement. This, in turn, benefits super funds by increasing digital engagement with members and potentially increasing the amount of salary sacrifice.
Q: What do you see as the main opportunities and challenges for the financial services industry and its customers in the next few years?
A: The introduction of open banking means some immediate challenges in terms of becoming compliant with the new regulations. The framework will create some regulatory costs for businesses as they seek to be able to participate in the system and will also cause financial services to become more competitive as they are forced to innovate.
It also means great opportunities for super funds that can capture the value of open super to understand their members more completely and help them to make better decisions – making super funds a lifelong partner for their members.
Further, as the CDR causes customers to consolidate and manage their data, financial services will have the opportunity to deliver more high-quality solutions. These solutions may be individualised offerings which better serve consumers, offerings that serve niche markets that were previously unprofitable, or improvements to existing products and services. For example, implementing advanced overdraft protection or alerts about upcoming bills that can save consumers from penalty fees.
Q: How do financial aggregators gain customer trust and ensure them that their data is secure?
A: To gain trust, it is crucial that aggregators operate on a consumer-centric basis. By giving consumers the ownership, control and transparency about the use of their data, as well as providing consent to financial services to use that data, aggregators can earn consumer trust.
By implementing security protocols such as encryption between aggregators and servers and periodic and ongoing tests for security vulnerabilities, aggregators can assure consumers that their data is as secure as possible.
Q: How does automation enhance the customer experience?
A: Automation is the perfect solution for enhancing the customer experience, due to its faster processing times for repeated and predictable manual work. This, in turn, allows the customer to spend their time and resources on other important things.
Further, automation minimises human error, which can help customers to avoid missed tasks, for example, which may occur due to scheduling conflicts or forgetfulness.
