The countdown is on for the introduction of ‘open banking’. We look at what’s in it for you.
From 1 July 2019, an exciting new change is arriving on the Australian banking scene. It’s called ‘open banking’ and it’s been hailed as one of the biggest changes in financial services in a generation.
Here’s how it works.
At present, it can be challenging to get hold of all the financial data that your bank holds about you – and harder still for either you or your bank to send that information to other banks or companies.
On the face of it, that’s not such a bad thing as at least your details are secure.
However, when it comes to something as simple as changing your everyday bank account, it can be a time-consuming process. Worst case scenario it may mean putting up with a product that’s no longer suited to your needs just to avoid the hassle of switching.
That’s where open banking is set to shake things up.
The potential for a better deal
The idea behind open banking is that you’ll be able to ask your bank to send your data to other banks or organisations, giving you better control over your financial data and how it’s used.
But it’s not just about control. Being able to shift your data to a new bank or service provider could help you score a better deal or improved service. It’s expected that this, in turn, will boost competition – good news for all of us.
Think of it this way. At present, when you apply for a home loan, the lender makes a decision about the level of risk you pose based on your credit score and details of your income and expenses. But that may not paint a complete picture.
With open banking, you’ll be able to authorise a new lender to access your data from your current bank. If the numbers show that you’re a good money manager, who consistently pays bills on time without letting your account take a dip in the red, you could be rewarded with a lower interest rate.
What about security?
Open banking only lets businesses access your data when you’ve authorised it. However, it’s a no-brainer that granting third party access to some very personal information calls for solid data security controls.
That’s why banks and other accredited companies taking part in open banking are required to follow strict security standards.
Where to from here?
Initially, open banking will be restricted to the major banks, with data to be made available on credit and debit cards, plus deposit and transaction accounts.
Eventually though, open banking will apply to all banks and will cover a broad variety of financial products – from savings accounts and home loans, through to personal loans and even home loan offset accounts.
Remember, you don’t have to go with open banking. It’s your data, your choice. However, while open banking can potentially let you access better value products, it pays to be mindful of how you manage your money.
Are you interested in making 2019 the year you make your home loan dream a reality? Make an appointment with an Aussie Broker today.