Australia’s slowness to offer open data leaves the country’s banking sector open to an incursion from more competitive foreign companies, according to Tyro Payments.
Speaking to members of the French-Australian Chamber of Commerce on Wednesday, 3 May, Tyro Payments executive director Jost Stollmann said that globally, banking is on the cusp of transformation.
“Transformations happen in windows, if you miss the window it’s gone, and I see that now the window of digital transformation opens in those business places that are more complicated and tend to be more regulated,” he said.
“I personally think that banking is ripe for disruption.”
Mr Stollmann said there are three ways this disruption could play out; the major banks could reinvent and disrupt themselves, innovative start-ups could come through to challenge the incumbent players, or data aggregators such as Alibaba’s Ant Financial could become the dominant force in financial services.
The primary challenge facing Australia’s banking sector at present is that it is “hopelessly far behind” its international peers when it comes to the availability of open data and open APIs, Mr Stollmann said, noting that the country is “at risk of losing the opportunity” to innovate and become more competitive.
“The productivity commission has tabled its report to the government and it’s nice, and they’ve discovered that open data has benefits for the community and we need it, which is all heading in the right direction, but it falls completely short in terms of scope,” he said.
“It’s really a problem; you compare this with the UK, the UK went through the global financial crisis and they do not have a high regard for their banks, so the government and the regulator are very keen to open up banking for competition.”
Mr Stollmann added that the European Commission has mandated that European banks must deliver open data from January 2018.
“That’s less than a year away. You can imagine that the European banks have screamed that this was the end of the world but they’ve moved on,” he said.
“Now that it’s mandated, it has unleashed investment into the space, and in my view there’s going to be a revolution in banking.”
The shift to an open data economy in Australia is critical to the ongoing competitiveness of the country’s banks, Mr Stollmann said, cautioning that without an open data economy to provide a “level playing field” for start-ups, the sector will suffer.
“If we don’t get our act together and move fast, the major banks will have a problem because they don’t know how to compete, the fintechs will have a problem scaling up and the foreign colonisers will win,” he said.
“The foreign giants will colonise – it’s nothing new, we’ve seen it in media and advertising, maybe we’ll see it now in commerce.”