Open banking trust lifts security bar

The topic of data security and the level and detail of customer consent and ‘trust’ in an open banking framework was just one of many thought-provoking themes raised through the ANZ Bluenote A path forward to open banking online discussion, recently.

“Not only you're holding on to a customer's sensitive data securely, but if you get their consent to use data for a specific purpose, that's the only purpose that it's used for,” explained Richard Hough, ANZ’s lead for its Open Banking initiative.

“And they always have the right to amend that consent and to revoke that consent.

“That gives the confidence for the consumer - hopefully as understanding awareness grows - that they can use that data in a kind of on-off switch to target specific outcomes they want for themselves, and they’re not just giving a bank or any party data recipient an open playing field to look at their data.

“And people will like to feel that their information personal to them is treated as such, and with respect and that's what [we] aim to do,” Hough explained.

ANZ managing director of Transaction Banking, Lisa Vasic, stated: “Security of customer data is of the highest order and … from an internal perspective I can absolutely validate that’s the way that we approach it in terms of our governance and compliance requirements and our protocols.”

“Our customers tell us that the same controls that we use for their financial flows is the expectation around their data - if not even have a higher order - because often there is highly sensitive customer data that sits within that set.

“So this is one of the reasons why we see banks still very much looked to by our customers as the providers of secure data and also why consumers look to their banks in terms of provider of services. And confidence around securing that data…

“I think in a world where identity theft and compromise is on the increase year on year, customers becoming much more aware - and when I say customers, both institutional and consumers - are becoming much more aware and conscious around the security of their data, and the expectations of those that hold their data to be able to maintain that degree of trust and compliance.”

An innovative platform of connection

In terms of CDR open banking evolving as a whole going forward, Mr Hough described it as: "We see open banking as a digital innovation platform for the next decade.”

Ms Vasic said: “While most of the focus on open banking has been at the consumer end, all parts of the financial services value chain needed to be connected for “any network effect to really take hold.”

“From an institutional perspective, we see open banking not just as a data interoperability framework but as a data framework which enables our customers… to consume data in a way that helps make their end customer-value proposition more responsive to digital consumption,” she explained.

She added that ANZ has a key role educating its institutional customers on open banking and broader data usage.

“It doesn't have to be an open-banking construct for [banks like ANZ] to be able to share data. We've been doing that from time immemorial,” she said.

“It's really around making sure we compartmentalise data to solve specific [customer] opportunities and problems.

“There's almost a parallel run happening with our institutional customers – one which is, how are APIs [Application Programming Interface] allowing them to consume bite-sized pieces of data, particularly as they're responding to real-time opportunities in their customer set?”

Ms Vasic added: “There's a consumer-led one - which is the open banking framework - with the rights that sit around the sharing of [anonymised] consumer data to drive our institutional customers to build better propositions to meet customer demand.”

Next year will be critical for open banking as the financial services sector further leverages data the system provides for customer propositions, according to Mr Hough.

“We see open banking as a digital innovation platform for the next decade,” he said, noting the supply of consumer data has been slowly building in the local industry since open banking began.

“That’s really getting to the point only now where it's going to be very interesting for data recipients to utilise. Because the full supply of data from major banks and other banks is now in place.

“We're going to see… in the next 12 months an increasing range of data recipients looking to consume that data, to give new customer propositions.”

[Related: https://www.theadviser.com.au/lender/43438-how-financial-services-businesses-can-avoid-fraud]