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Open Banking – How we can work together

By ANZ , Head of Open Banking Jody Bullen

13 May 2022

StockSnap ZLEVSWFWZC min 1

“The whole is greater than the sum of its parts” -Aristotle (Philosopher)

 

I recently shared my thoughts on Open Banking - the opportunity for NZ and how we can work together to achieve it. As New Zealand edges closer to a regulated Consumer Data Right I’ve been thinking more on this, particularly the new ways we can work together to create new customer value propositions that would be more difficult or impossible to create on our own.

Opening up to Open Banking

For the past two years, alongside many other industry contributors, ANZ has strongly supported an industry-led approach towards Open Banking through the API Centre, taking learnings from overseas to develop a right-sized, incremental approach to help accelerate good customer outcomes through more open banking. 

Focus hasn’t only been on the development of technical standards, but a framework of components that collectively make it easier to work together. I often refer to it as TOP – Technical, Operational and Partnering capabilities.

By way of a few examples, we have recently been discussing:

  • How might we enable sharing of data across joint accounts and accounts that require multiple signatories; and
  • How to make it easier to undertake proof of concepts/test-and-learn pilots of third party services. This is an area I am particularly passionate about as accreditation models overseas have made this extremely difficult with a one-size fits all model requiring third parties to become fully accredited before they can access data to test new ideas and propositions in market with real customers. I am not talking about technical testing in sandpits but testing and learning with customers in a controlled way.

At ANZ we’ve been focusing on developing our partnering capability and readiness while developing industry standard Open Banking services.

There are different ways to work together.

When considering how we might work together I often think about two different pathways – the Regulatory approach and, the Relationship approach.  

Looking at how the Regulatory approach works overseas, third parties must seek accreditation via a centralised independent process in order to participate in the ecosystem and access data, or use open services offered by Banks or Data Providers.  Once accredited and subject to explicit customer approval, third parties will be able to access customer data and services across all participating Banks or Data Providers. 

No relationship with Banks or Data Providers is required but data access is restricted to the scope of services and rules of participation prescribed by the Regulation. Examples include: the data-sets and attributes that can be accessed; the services such as payments initiation that can be used and scope of the service; the consent process and requirements; the products and customers that are eligible; access rules and performance (in the UK Third Parties can only call for data a maximum of four times a day). Any deviation from the prescribed regulatory rules will likely require a commercial arrangement or a change to the scope and/or rules.

Overseas accreditation requirements remain high, can take 6-18 months and cost upwards of US$100,000, with some such as Paypers, estimating costs of accreditation in Australia for CDR could reach USD 500,000 plus ongoing maintenance of USD 50,000 per annum.

While we are moving towards a Regulated Consumer Data Right we are still some way away from having an accreditation model in place in NZ.

By working together, we can achieve more than we can individually.

The alternative to the Regulatory approach is the Relationship based approach which provides the opportunity for two-way value with non-banks benefiting from our scale, resources, expertise, and customer reach and banks benefiting from the agility, specialisation and innovation of non-banks. This is an exciting prospect that could provide the opportunity to test ideas, work with different data-sets, services and access, on different terms that accelerate development and adoption.

As part of ANZ’s ambition to support our customers to improve their financial wellbeing along key customer journeys (such as helping customers buy, own and pay-off their homes and start, run and grow a business) we are passionate about working alongside other companies  with compatible goals.

View Bills is a great example of this.  Working collaboratively with Spark, we tested, piloted and launched a service that makes it easier for customers to manage and pay their bills, resulting in earlier payments and less delinquency for billers.  We’re now looking to scale with more billers directly or through third parties.  The service provides a strong value proposition for customers, billers, third party aggregators and ANZ.

A relationship-based approach brings flexibility.

A relationship-based approach isn’t a one-size fits all model and can adapt to different scenarios – each offering its own benefits and suitability.

The Enabled Relationship Model

Third parties are enabled to develop and test their propositions, business models and demonstrate the necessary data security and privacy controls with the potential to build a more aligned or strategic relationship with the Bank, if desired.

An example would be running a pilot, such as we did when we first explored View Bills with Spark before we launched the full service where Spark were initially given the opportunity to approach a limited number of customers to test the proposition. 

The Referral Relationship Model

With this model, third parties and ANZ offer value to customers together.  ANZ may promote and/or refer customers to the service to accelerate adoption. A third party will need to have demonstrated a strongly aligned customer value proposition, with a proven business model, customer privacy and security controls.

An example of this would be our relationships with a number of third parties whose tools can help customers with payroll, cash management and connecting bank records with their online accounting software. This relationship model enables both parties to offer enhanced products and services to their business customers and for customers to benefit from the relationship.

The Embedded Relationship Model

In this model the third party capability and/or proposition is fully integrated into ANZ’s customer experience and made available to ANZ customers. This requires a strong, established and aligned relationship with ANZ. It will also mean non-banks will need to meet and comply with ANZ’s obligations as a regulated entity.

As an example, ANZ has worked with Bud to empower bankers with a new toolset. Advisors are able to upload applicants’ bank statements to a dashboard which uses the statement data to capture and verify the applicant’s income and expenses in detail. 

Different models create different pathways and options to work together, from ideation to proposition development to scaling by accelerating adoption and impact.

Third parties and banks should understand the limitations and benefits of the different models.  In considering which approach is best, it will depend on the maturity of the third party and proposition, alignment of purpose (to assist in bank prioritisation), the strength of the value proposition and the target business model, and pathway to market.  

Regardless of approach, third parties need to be very clear on their value-proposition, demonstrate a strong ability to protect customer privacy, continually test assumptions that underpin their business model and, be open to evolving together.

At ANZ we are excited about the potential of Open Banking and working with third-parties to see what is possible to improve the financial lives of New Zealanders together, a worthy innovation goal for everyone.

 

Article is an opinion piece by Jody Bullen, Head of Open Banking, ANZ.

Hear more about ANZ's journey to Open Banking on Monday 16th May during the Techweek TV session: Opening up to Open Banking, where ANZ’s Bronwyn Jones will be joined by Visa, Blinkpay and Spark for a reflective discussion on their experiences of setting up Open Banking systems and collaborating in the delivery of a number of customer facing tools.

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