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In the lead-up to Sibos 2018, Managing Director for Asia Pacific Payments Graham Rothwell and Business Executive Advisor for Payments Strategy Mike Aston met to discuss the opportunities Open Banking and the New Payments Platform present banks in Australia. This blog captures key takeaways from their talk.
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Australia’s banking industry is on the brink of major transformation with the launch of the New Payments Platform (NPP) in February 2018 and Open Banking legislation slated to come into effect in July 2019. Each of these developments is significant in its own right, but the confluence of the two will usher in an era of real-time commerce that will unlock a host of new opportunities and value propositions for banks.
The NPP is an open-innovation platform designed to enable 24/7 real-time value transfers. The platform allows large amounts of remittance information to be transferred along with payments, including images, invoices and more. It uses the addressing service PayID, which allows users to link their financial accounts to phone numbers, email addresses or business identifiers, thereby removing the need for providing account numbers when making a transfer.
There are basically two layers to the NPP: the basic infrastructure, which enables the instantaneous transfer of information between participants of the scheme, and overlay services (i.e. the payment services that businesses will be able to plug into the platform to meet consumer needs). Bpay is rolling out an initial overlay service called Osko in three phases: The first phase, which has already gone live, allows real-time person-to-person value transfers accompanied by 280-character descriptions; the second phase will allow much richer data transfers and the third phase will introduce a request-to-pay service.
The launch of the NPP coincides with the introduction of new legislation known as the Consumer Data Right (CDR), which encompasses Open Banking. The legislation is designed to give consumers greater control over their data. It requires institutions to make their customer data available to accredited third parties if those customers agree. Australia’s four biggest banks will have to open up data on credit and debit card, deposit and transaction accounts by July 1, 2019, and on mortgages by February 1, 2020. Other financial institutions will need to comply 12 months after the Big Four.
By enhancing transparency and the instantaneous exchange of information, the combination of the data-sharing requirements of Open Banking and real-time value and data transfers under the NPP will enable suppliers and consumers to more efficiently manage functions like liquidity, treasury and cash flows.
For banks, there is huge potential to leverage the commercial capabilities created by Open Banking and the NPP, either by creating new products or by collaborating with third parties to develop innovations out of a wealth of new data resources. Institutions that begin to forge those connections now will be first to benefit.
Accenture at Sibos
We’ll be discussing Open Banking and other topics at Sibos. Come see us at our booth and join us in the conversation around enabling the digital economy. Keep up to date on all the latest from us around Sibos right here on the blog.
