Open banking will put more power in consumers' hands

Tuesday, 24 July 2018

Change is coming for the financial services sector – and it could mean consumers will soon have the power to choose who they borrow money from, rather than applying for loans and hoping for the best.

Credit score provider CreditSimple has launched an online spending tracker, Money Simple. It provides a dashboard for users to see where they spend their money across multiple accounts and credit cards, even with different banks and financial services providers.

The tracker pulls spending data from New Zealand banks including ANZ, ASB, BNZ, Co-op Bank, Kiwibank, TSB, SBS and Westpac.

It's an example of the growing move towards open banking - platforms sourcing data from banks and other financial providers and using it in new apps and platforms.

READ MORE: Open banking pilot begins in New Zealand

A pilot programme is under way in New Zealand focusing on making open banking as secure as possible.

CreditSimple chief executive David Scognamiglio said the Money Simple platform was designed to help people get control of their spending.

When they saw all the information in one place, it would be easier to see where there could be efficiencies, he said. 'It allows you to look at what you spend and categorise it, then make decisions.'   

International moves towards open data and open banking were happening quickly and giving consumers ownership of their own information, he said.

Tracking spending was just the start.

Scognamiglio said consumers should soon be able to put that data into comparison sites and determine what products, such as loans, would best suit them, and which they were eligible for.

They could compare the rates available and determine what represented the better deal. 'It's a move to a system where consumers can get things as opposed to applying for things.'

He said there was the potential for platforms such as this to help consumers with a 'laundry list' of other things, too.

It could make taxation processes easy, help with insurance questions and even show consumers things like the number of loyalty points they missed out on through not waving their membership cards at the supermarket checkout.

Using their data, consumers could see what other insurance companies would provide for the same premiums or what cheaper price they could get on their utilities. A platforms might ask whether customers were getting a good rate, he said, and if they weren't, it could present them with alternatives.

'It can help make savings in lots of places. I think open data is going to change the way we bank and do insurance.  The maths around being able to choose a personal loan is Year Two maths, a 4 per cent loan is better than a 6 per cent loan.'

Credit was a natural place to start because it would remove the application process, he said, and replace it with one where lenders vied for business. That would be more palatable to most cosumers.

Banking expert Claire Matthews, of Massey University , said it was a logical step for CreditSimple. Consumers would probably see more value in tracking their spending than in seeing their credit scores, she said.

'Being able to see all your banking together and having your finances tracked, that's a more tangible benefit for the average person.'