The consumer watchdog will spend more time ensuring a new financial data-sharing regime is resilient against cyber security threats, after technical hiccups delayed the launch of open banking by six months.
In a disappointing development for fintech firms, the Australian Competition and Consumer Commission pushed back the start date for the government’s open banking reforms on Friday from next February to July.
The change will hold back the plans of neobanks keen to entice big bank customers who are willing to share their data, but the ACCC said the rollout had proven more complex than it had expected and that trust in the system was vital.
Open banking is a policy that will allow bank customers to securely share financial data about them held by the bank with a competitor, such as a fintech firm.
ACCC Commissioner Sarah Court said that after various technical defects were detected, it would not have been responsible to roll out open banking in February, which had always been a tight time frame.
“As is not unexpected with a major IT infrastructure build, there are just issues arising … that are taking time to work through,” Ms Court said.
“We at the ACCC have formed the view that because of these potential issues, and because we want to take time to work through them properly, that it’s better to push out the start date to allow the whole ecosystem to really have undergone that … more extended security testing.”
The ACCC is currently working on connectivity – making sure the “pipes” carrying the data from banks to fintechs were working properly. Ms Court said the testing was still progressing well, but it was taking longer and was proving more complex than had been expected. It will also spend time making sure the information is secure.
While some in the fintech sector suggested the banks were to blame for the delay, Ms Court said banks were at “varying stages of readiness” but there was no clear laggard responsible for the delay.
Ms Court said banks were “quite understandably extremely concerned about cyber security and the potential for this new system to introduce some weaknesses into their IT defence systems”.
Banking is the first industry where the government plans to roll out what it calls a “consumer data right”, which will later apply to telecommunications firms and utilities.
The chief investment officer of neobank 86 400, Brian Parker, said the delay to open banking was “disappointing, but not a huge surprise”.
“It’s incredibly important that the incumbents get CDR right, and it was becoming increasingly apparent that the quality wasn’t going to be there by the February deadline. What we need now is a greater level of acceptance from the incumbents to meet the new deadline,” Mr Parker said.
FinTech Australia general manager Rebecca Schot-Guppy said: “This isn’t the news we wanted to hear right before Christmas. However, its unsurprising given some of our members expressed doubts that the major banks would have their data formatted and ready in time for the policy launch in February 2020.”
Source: Thanks smh.com