Open banking has been hailed as a revolution. You can take control of your data and change the way you bank. But as the changes roll out in Australia, many of us are still in the dark as to what it all means. Luckily, Monzi’s here to help. We’ll look at the what, when, where and how so you know exactly how you can benefit from open banking. Let’s go.
Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.
What is open banking?
Opening banking is about taking control of your personal banking data. For so long, banks have maintained almost exclusive control. But if it’s your data, you should have access to it too, right?
With open banking, you’ll have the opportunity to share your complete financial data with other banks, financial institutions as well as a range of additional third-party organisations. With this, you can potentially access better deals, products and services as well as receive financial advice tailored to your situation.
In short, open banking is here to increase competition between banks and to help you make better financial decisions. If it works as expected then it’s a sure-fire win for consumers.
In saying this, open banking is still in its infancy, particularly in Australia. In all likelihood, the full scope, impact and uptake of the proposed changes may not be known for years. However, we think it’s okay to be optimistic.
How does open banking work?
In short, it’s simple. Once your bank allows open banking, you’ll have complete access to your data. This ranges from credit and debit cards to savings accounts and even bank loans.
You are then free to share this data with whichever banks or accredited financial institutions that you choose. Maybe you’re looking for a better interest rate or you’re just using an app to help you track your spending. Providing this data means that the work can be done for you. Budgets can be created automatically or new financial products can be presented to you.
At the end of the day, it’s about giving you the control and opportunity to make better decisions and access better deals.
Which banks use opening banking Australia?
Unlike some other countries, Australia has taken a legislative approach to reform meaning that within a few years, all banks must participate in open banking. However, this will be a gradual process.
The changes will roll out later this year beginning with the big four banks. By July, it is expected that eligible accounts holders with these institutions will have the option to share their debit card, credit card and transaction account data with accredited financial organisations.
For further information, the Australian Competition and Consumer Commission has provided a detailed breakdown on the timeline of this process. Check it out.
How safe is opening banking?
There’s no doubt that the prospect of sharing your personal financial data is a little nerve-wracking. After all, who knows where it could end up.
In saying this though, there are a range of measures in place to ensure that you are protected. All banks and financial institutions must comply with a range of strict protocols related to how they can access and store your data. Moreover, your data will only ever be accessed with your express content. Institutions that violate these requirements may face significant sanctions.
From your perspective, there are steps you can take too. Most importantly, ensure that you only deal with financial organisations accredited through the Australian Competition and Consumer Commission (ACCC).
Is open banking mandatory?
From a consumer perspective, open banking is not mandatory. As the changes are implemented, you will have the opportunity to share your data with a range of financial institutions. However, you are under no obligation to do so. After all, it’s your data. As a result, if you are comfortable with your current bank and aren’t looking to change then open banking may provide few benefits for you.
On the other hand, for banks in Australia, providing consumers with access to their data will be a legislative requirement over the coming years. While the roll out will be gradual as we’ve already discussed, ultimately, it will be a non-negotiable. Consumers will be able to access their data and share it with whomever they choose.
What is the point of open banking?
The point is to help consumers regain control. While banks have a right to monitor your financial data, you should have the same access too. By making this information more readily available, it then becomes easier for consumers to make better decisions, find better offers on quick loans and access useful financial tools.
In saying this, while changes can be made, the onus is still on us as consumers to take advantage. If we remain stagnant, content or unaware then the measures will go to waste. However, through education and knowledge, it’s possible that open banking could become a significant reform.
In a best case scenario, the changes could result in consumers getting better and more personalised deals, accessing finance easily and implementing more effective spending habits.
What are the benefits of open banking?
Open banking is about transparency, choice and competition. For years, Aussie consumers have been content to join a bank and stick with it. This apathetic approach has left many of us with accounts, fast cash loans, mortgages and other financial products that are poorly suited to our needs.
This is what open banking seeks to change. By making it easy to share your data, it becomes simpler for other financial institutions to outline what they may be able to offer you based on your situation (e.g. if you’re a Centrelink recipient). Not only that, this information comes to you through a range of easy-to-use, comparison-based services.
That’s not all though, other potentially benefits include:
Competition is a good thing
If data sharing is made easy then pressure will be placed onto banks to either win your business or hold onto it. As a result, it’s quite possible that you will be offered better deals or even a range of improved products. With so much competition in the market, there’s no doubt that you will have plenty to choose from.
A range of handy tools, apps and services
Sure, open banking might change the banking sector, but the full range of potential changes stretches far beyond this. With full access to your transaction account and debit card data, the door is open for a range of handy apps to transform how you monitor your spending. This is already evident in the UK and Europe.
As an example, there might be an app that monitors your accounts and informs you if you’re about to overdraw your account. It could even move money from your savings account to your transaction account automatically.
At the end of the day, the list of potential innovations is endless. While we don’t know exactly what products and services will emerge, automated budgets and tracking of your spending will almost certainly be featured.
It’s easier to find lenders and loan products
As of right now, finding the right lender can be quite the hassle. You can spend hours researching, comparing products and still not be certain that you’ve found the right deal or a lender that will accept your circumstances (e.g. offer bad credit loans). Open banking could change that.
With full access to your financial details, you may be able to share your data with a range of lenders to get a realistic offer sooner. From there, comparing products side by side becomes so much easier (e.g. using personal loan comparison rates). Moreover, lenders may offer personalised loan rates that are based on your situation. For example, a good credit borrower with a strong repayment history may receive a lower personal loan rate than a bad credit borrower.
What are the implications of open banking?
The most significant implication is the increased competition that it will create. In the past year, less than 5% of Australians switched banks. Whether that’s through a lack of care or simply a lack of information, open banking will at least make it easier.
By having the ability to share your data, you can quite possibly create a market for yourself. Banks can assess your data to get an idea of the products they might be able to offer you. In some cases, you may be able to access a more competitive rate on your savings account or first home loan that makes switching worthwhile.
This opens the door for banks to get innovative. If they are able to get creative and offer unique, individualised products, it’s quite possible that they could see an increase in business.
How will open banking affect banks?
In short, if the changes occur as expected then banks will be placed under pressure to adapt. While uptake may be slow and gradual, over time, as more and more Australians make use of open banking, a shift in preferences will likely occur.
While currently most of us are simply willing to accept the bank we’re with now and have no intention of looking outside, things may change. If other financial institutions are willing to take steps to fit your needs, then banks will be pressured to do the same. As a result, we may see a range of new and innovative products hit the market.
How do banks benefits from open banking?
Open banking presents a significant opportunity for banks and other financial institutions. With access to a greater range of data and the opportunity to tailor products to individuals, banks with an innovative mindset have the opportunity to increase their appeal and their overall customer base.
Taking steps to meet the needs of both existing and prospective customers based on their unique financial situation should provide a significant boost to the first banks willing to adopt this strategy.
While exactly how this will look remains to be seen, possible options include a lower comparison rate, fewer fees as well as a host of new services.
What types of bank data will be available?
Once the full roll-out has been completed, you will be able to access and share the following types of data:
- Consumer data: this is simply your basic personal information. It includes details such as your name and date of birth.
- Account data: this is all the information related to your money. It includes your balances, accounts and instant loans as well as debit and credit card data.
- Transaction data: where, when and how have you spent your money. This information will be the key to apps focused on monitoring your spending and providing budget solutions.
- Product data: all the details about the products offered by your financial institution. This information is key for comparison services to help you potentially access a better deal.
How will open banking affect me: an example
Providing one example is tricky. After all, open banking could open the doors for a range of potential changes. In saying this, if you’re after examples then looking to the UK is a useful strategy.
Open banking has been in place for a few years now and the changes are already apparent. One key change has been the rise in popularity of budgeting apps such as Yolt. In short, their major selling point is that you hardly have to lift a finger. With full access to your financial data, your accounts can be monitored from one, easy-to-use hub making it easier to monitor your spending and make better financial decisions.
Beyond this, comparing and finding the right financial products will undoubtedly be easier too. This can include credit cards and savings accounts but could eventually extend to variable rate mortgages too.
How much does open banking cost?
In short, it won’t cost you a cent.
Based on Australian legislation, you can access all of your financial data and banks must supply it. As a result, you won’t be charged, it will simply be an additional feature that you experience when you open an account. From there, you are free to share it with whichever accredited financial institution that you choose and they are free to access it (with your consent).
This is logical given that it’s your data. Having to pay to access something that is rightfully yours seems a little unfair, right?
Is Australia the first country to offer open banking?
Not at all. While Australia is aiming to implement open banking over the coming year or so, we are by no means the first country to do so. Much of the early work and pioneering was seen in Europe and the UK where legislation has been implemented to ensure that all banks and financial institutions are on-board.
Following this, a number of countries through Asia have implemented similar changes. However, the exact extent of the changes as well as the regulatory requirements have varied significantly.
In addition to this, some countries have adopted their own novel approaches too. In other words, it hasn’t simply been a process of replicating the European approach. With this innovation comes the possibility that more effective procedures may be discovered.
Ultimately, new changes are occurring almost every day. Open banking is a new concept and at this point, we are still unsure exactly where it will end up. However, so far, it seems like a win for consumers. As policies grow, adapt and are discovered, the list of potential benefits will only grow.
Will it be available for businesses too?
While we’ve mainly focused on personal credit and finance, there will also be services and products available for businesses too. Whether it’s comparing small business loans or simply finding the best business transaction account, open banking could create big changes in how business finance is done.
One of the key benefits is that with the significant availability of data, loan applications could soon become a breeze. In fact, you might have an outcome far quicker than you would have in the past.
In addition to this, small and start-up businesses that previously had trouble securing credit may find themselves able to access a range of different loan products.
Comprehensive credit report: what does it mean?
Just a few years ago, Australia implemented changes to credit reporting. These changes helped to introduce what’s known as Comprehensive Credit Reporting.
In short, Comprehensive Credit Reporting is all about including more information on your credit report. While in the past, listings mainly comprised of mistakes (e.g. loan defaults), the reforms have led to information such as your repayment history and the credit accounts that you hold being included too.
With this, lenders now have more data to work with. As a result, they can potentially develop a clearer idea of your creditworthiness. This will allow them to make more accurate decisions about your ability to repay your loan and even differentiate between borrowers with similar credit scores or financial situations.
At the end of the day, Comprehensive Credit Reporting is another step towards open banking and making information as available as possible. The more data there is available, the better it is for everyone.
What is now listed on my credit report?
In short, your credit report is a list of all your credit-related activities. While in the past it typically contained mainly negative listings, as we’ve just discussed, there have been a number of changes implemented to include some other details too. As a result, you may not need to fear a credit check on your loan anymore.
In any case, your credit report will typically contain the following details among other listings:
- Your personal details (e.g. name and address)
- Two years worth of repayment history
- Credit accounts that you’ve applied for and opened.
- Credit inquiries
- Any overdue accounts
- Defaults, debt settlements and bankruptcy
Can I improve my credit score?
As more lenders begin to offer tailored rates on loans for poor credit and other such products, there has never been a better time to try and get your credit in order.
However, when it comes to improving your credit score, it is a good news/bad news situation. The good news is that it is possible to improve your credit score. The bad news is that it will take time and discipline. In other words, there are no quick-fixes. You must simply implement effective credit habits and remain disciplined for a period of time in order to see positive results.
If you are able to do this then you may benefit from the lower rates that may be offered by some lenders for having a better credit score. Moreover, you’ll be a healthier credit user too.
As a guide, strategies that may help you improve your credit include:
- Open new credit accounts only when you need them.
- Try to find the best rates and terms before opening a new account.
- Pay your bills on-time.
- Keep credit balances low.
- Monitor your credit report to ensure that there are no errors.
Open banking: where are we at?
As of now, open banking has a long way to go. In the UK, one year after open banking services were implemented, more than three quarters of the population still had no knowledge of the concept.
This reflects the challenge that we face. While open banking may come with a range of benefits, without public education and awareness they will likely go to waste.
Over the coming one to two years, Australia is looking to implement a range of open banking measures. While they may produce positive results, it is unlikely that we will see significant changes in the short-term.
Open banking and Monzi
When it comes to open banking, Monzi are unable to offer any relevant products or services. Instead, we’ve simply tried to inform you of the changes that you’re going to see over the coming years and how you might be able to take advantage of them.
However, what we can help with is quick loans online. In short, if you find yourself short on cash, Monzi’s lender-finder service might be able to make it quick and easy to find lenders offering instant online cash loans. Best of all, you can potentially access cash amounts from $300 to $10,000. Check out the loans that may be on offer below:
Small personal loans come with the following features:
- $300 to $2,000
- 12 month repayments
- $2,100 to $4,600
- Secured loans
- You can choose a repayment term between 13 and 24 months
- $5,000 to $10,000
- Repaid over 13 to 24 months
Am I eligible to apply with Monzi?
Before you begin your application, you must make sure that you are eligible to do so. In short, we have four quick boxes that you must check. See below for details:
- 18 years of age or older
- Australian citizen or permanent resident
- Have a current email address and contact number
- Possess an online bank account with at least three months of transaction history
Now that you’ve confirmed your eligibility, it’s time to move onto your application.
How do I apply?
Applying with Monzi couldn’t be easier. In short, we’ve refined our application process down into four easy steps. You can have it completed in minutes. Check it out:
- Select your loan amount and preferred repayment term (where applicable).
- Enter the necessary details (e.g. name, date of birth, bank details) and then hit submit.
- Kick back and relax. Our automated system will take over and attempt to pair you with an available lender from our network. If you apply during business hours then this may take as little as 60 minutes.
- We’ll contact you via text with an outcome. If we were successful in our search then your lender will be in touch to begin the assessment process.
Why would I need to apply with Monzi?
Personal finance isn’t always an easy road. While one day you could have everything under control, unexpected expenses can appear from nowhere. Maybe your car breaks down or a pipe burst in your home. Whatever it is, a easy approval cash loan may be an option for you if you don’t quite have funds to cover the costs.
Luckily, the lenders that Monzi works with offer loans to cover a range of expenses. In fact, they may be available for almost any personal expense that you encounter. All you need to do is provide the reason when you apply.
As a guide, common reasons for applying with Monzi include:
- Rental bond payment
- Household renovations, maintenance or construction
- Car loans
- Holiday expenses
- Vet and medical bills
- Debt consolidation loans
Do you have questions about Monzi, who we are or what we do? Don’t be afraid to contact us. We’re open, honest and will always do our best to provide you with a response that addresses all of your queries and concerns.
Email us at email@example.com or submit a contact form here and one of our friendly customer service team members will endeavour to get back to your ASAP. However, do keep in mind that we will only monitor this account during business hours. Not to worry though, we’ll reply as soon as we return to the office.
Ready to begin? Scroll up and apply today.