Published on the 08/11/2018 | Written by Heather Wright
With Aussie banking's little brother (NZ) sitting in fourth...
Australia has been ranked second most advanced country in Asia Pacific for open banking readiness in a new report, with New Zealand taking fourth spot.
The Finastra Open Banking Readiness Index, which was done in partnership with IDC Financial Insights, shows momentum for open banking accelerating across Asia Pacific – and a spirit of collaboration with 84 percent of banks considering collaborating with external partners to enhance their open banking capabilities.
However, the report also shows there’s plenty of work still to be done, with just 25 percent of Asia Pacific banks in the ‘advanced’ stage of data-based transformation.
“The emergence of new digital banks in Australia will intensify investments into open API architectures.”
The index is based on interviews and surveys with 146 banks across Asia Pacific and covers adoption of APIs, fintech/third party ecosystem, state of data-based transformation, data monetisation and state of innovation.
It shows Australia as advanced in adoption of APIs, state of data-based transformation and state of innovation, and intermediate in the remaining two categories of fintech/third party ecosystem and data monetisation.
Only Singapore, which also scores an ‘advanced’ rank for fintech and third-party ecosystem, garners higher marks, again claiming top spot with a score of 8.1 out of 10. Australia gains a score of 7.1, followed by Hong Kong on 6.6. New Zealand, which is ranked intermediate across all categories, comes in with a score of 6.4, alongside China.
So what has given Singapore the leg-up over other Asia Pacific countries? The report notes the Monetary Authority of Singapore (MAS) was the first regulatory body in Asia Pacific to publish guidelines on open banking, back in 2016, and to map out a plan for banking data to be made available through API. The Association of Banks in Singapore and MAS have also produced a Finance-as-a-service API Playbook, providing common APIs and guidance on security standards and governance models and the report says Singapore continues to set the pace for other regulators in the region.
With its promises of transparency, more personal, real-time engagement and easy integration of banking into everyday life for customers and expanded customer reach, new revenue and the promise of faster innovation with agile external partners for banks, open banking has been hailed as a major catalyst for change in the sector.
Michael Araneta, IDC Financial Insights regional head of research says “Open Banking is a rare chance for banks to unbundle and re-bundle the value chain of financial services so products, services, data and functionalities can be consumed and provided by third parties.
“This will fundamentally change the way banks will rethink products and delivery channels, so that they are able to transform customer engagement.”
Last month IDC Financial Insights Asia/Pacific vice president, Michael Araneta, told iStart he expected Australia to lead the world in terms of defining citizen data rights – who owns, controls and manages data.
The Index puts Australia as an early adopter, alongside Singapore and Hong Kong, noting the release of guidance for open banking in May 2018, and guidelines on data utilisation and access banking to ensure privacy remains a fundamental feature of open banking.
It says the emergence of new digital banks in Australia will intensify investments into open API architectures for the industry.
Meanwhile, New Zealand is ranked as a ‘steady warm-up’, with the report noting the country’s regulators have yet to release any open banking guidelines, but that banks and financial services providers are trialling software that will enable providers to make retail payments on behalf of customers.
Those trials, which are being co-ordinated by Payments NZ, will set common standards for customer data sharing in the future.