The open banking regime could lead to more competition within financial services provided it doesn't flood Australians with countless options, according to King & Wood Mallesons.
A panel of industry representatives at the ASIC Forum 2018 in Sydney this week discussed the characteristics of a strong open banking regime, arguing that the customer’s best interests must be kept in mind.
Panellist and head of the government’s Review into Open Banking, King & Wood Mallesons partner Scott Farrell, said the nascent data industry should be working towards creating greater convenience for customers.
“I hope the creative and innovative data industry can provide something that helps customers, rather than bombard them just with information,” Mr Farrell said.
“That's a measure for its success. If the best that that industry can do is just bombard people with a thousand choices, then it's failed Australian customers.”
He pointed out that competition alone was not significant in and of itself, but rather a means to an end.
“[Competition] doesn't actually mean anything for a customer. It's the choice and convenience that means something for a customer.
“That might come from competition, but you can't feed your family with competition,” Mr Farrell said.
Co-panellist and ‘neobank’ Xinja co-founder and customer innovation director Van Le said the open banking regime should provide data in order to help customers make informed decisions.
However, the data or information should not be “so much that consumers get confused” such that “the whole benefit of open banking is lost and becom[es] a morass of indecision”.
“The real challenge for us, I think as an entire industry, is: how do we facilitate those choices with enough information, in the right context, giving customers control, so that in the end of the day, decisions that people make are decisions that people can be satisfied with?” Ms Le said.