What's all the fuss about Open Banking?

We Talk Cents Podcast

"Open Banking" has been discussed a lot in the media lately, but what exactly is it? When will it roll out and how will it impact you? Get all the details from Dan as Blaize hits him with all the Q's related to the Consumer Data Right.

The following is a transcript taken from episode 40 of the We Talk Cents podcast. The transcript is created by AI software so it might not be perfect - please forgive any imperfections or grammatical errors.‚Äć

Blaize Pengilly  00:09

Personal finance, budgeting, cash flow and investing don't have to be scary words. The We Talk Cents podcast is here to help you learn more about money and take control of your personal finances. We Talk Cents podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation. You should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor. 

Dan Jovevski  00:45

For more information, please check out wemoney.com.au/disclaimer  Hey hey hey  everyone, it's Dan here from We Talk Cents podcast.

Blaize Pengilly  00:56

And I'm Blaize. And hey, hey, hey to you, Dan. How are you?

Dan Jovevski  00:59

Blaize, I'm doing absolutely marvellous. I can't believe it's already well past 50% of the year gone. And I feel like it just went like a blink of an eye. But hey, second of August feeling superduper happy and I think we've got some really positive news to share. That's probably the reason why I'm a little bit more perkier than my usual self, Blaize. But how about you? What's going on your world?

Blaize Pengilly  01:20

Well, I'm, I'm excited to end because I'm not sure if you've seen the news. But when I logged into check our podcasting account, guess what, we cracked 10,000 listens! It's over that amount now. So yeah, very exciting. And I just, I know, I say I'm excited. And then I'm that this is exciting a lot. But really, this has just put a huge smile on my dial. Because knowing when we started this podcast a year ago, we didn't really know, you know, if people would tune in, if people would like it. And the feedback we've been getting has been so positive. So to hit a milestone, like 10,000 listens is incredible. And this week, I received a message on our Instagram, from a listener saying that we'd inspired them to speak to a financial advisor, and that they got an appraiser sorting out their money and sorting out their superannuation, which is I mean, 10,000 listens is an awesome achievement. But having inspired someone to take control of their finances and actually make positive change for their financial future is frickin awesome. So congratulations to that listener and to everyone else that tunes in, if you've made any financial change for the better in your life, we are so proud of you. And even if you're just listening and you haven't made any changes, listening is a fantastic start. Because it means you are on the path to being better with your money and learning about money, which is you know, knowledge and information is everything. So, yeah, thank you so much to you listening, because we wouldn't have hit this milestone if it wasn't for you tuning in each and every week. So thank you from the bottom of our hearts. So stoked with that.

Dan Jovevski  03:02

Well Blaize, I fully concur with everything that you said. And it just feels amazing that you know, 10,000 people have tuned in listen to something. And the fact that we looks like in some cases have made some positive changes in people's lives. And I think that's the reason what keeps Blaize and I going every single week that we get to learn something, because hey, we're doing this journey together with you. And we're researching and uncovering certain things that you may be interested in. And the fact that you're also applying some of those tips and tactics in your life to help you get ahead financially. Makes Blaize and I are the happiest people in the world. So thank you again,

Blaize Pengilly  03:39

So good.

Dan Jovevski  03:39

Well Blaize. That is not all we have another milestone- We do, we 100% do.

Blaize Pengilly  03:46

Do we? What do we what else have we got to celebrate?

Dan Jovevski  03:50

We did launch the podcast in October last year. In a very similar time. WeMoney was also launched into the public space. And yes, I'm very happy to announce that we money has cracked 100,000 downloads since our launch five months ago.

Blaize Pengilly  04:09

That's awesome. So cool. What a week oh my goodness, far out 100,000 downloads that is incredible. For those of you listening that don't know what WeMoney is. WeMoney is a smart money management app that lets you see all of your bank accounts in one place. It's essentially a 360 degree view of finances and makes managing your money super easy. 100,000 downloads that is freaking great. I'm very, very happy with that. What a surprise.

Dan Jovevski  04:39

Well Blaize it is and it's just amazing to say that real human beings are going out there taking control of their finances and doing something to better understand their money and some of the feedback that we get from our members in terms of how it's changed their life of the positive how they've uncovered subscriptions that they didn't know they were paying like old sneaky little gym memberships that they put on hold and uncovering that they're paying too much on things like electricity and it could be saving a lot more money. So, look, it's an awesome achievement. But let's get back to the show. What have we got in today's news, Blaize?

Blaize Pengilly  05:11

Okay, so news, we'll chat about the news. Now, if you don't care for the news, totally fine. Skip ahead a couple of minutes and we will get into our discussion about open banking. And why it's probably a great thing for you. But news this week, I mean, of course, we heard about Sydney lockdown being extended for another four weeks. So our thoughts are with you if you are in an affected area. Lucky Melbourne for their lockdown lifting at the end towards the end of last week. But yeah, if you're in Sydney, or if you're in a lockdown affected area, we really feel for you. And I know that it can be really difficult, especially managing money, or not knowing when your next paycheck is coming in. Or if you've had your work hours caught or you're not able to work at all, we totally feel for you. So we've actually written a blog for where you can find financial support, if you're affected by lockdown, and that's up on the WeMoney blog. So I'll pop a link for that in our show notes. But yeah, I think lockdown was the biggest news that I saw this week. What did you see Dan?

Dan Jovevski  06:10

What was the big one that I saw that really caught my attention? Was that Spaceship micro investing app again.

Blaize Pengilly  06:18

I just love the app!

Dan Jovevski  06:19

I know - can you believe it or something else about the app? I think it's maybe the branding, maybe it's the functionality is probably everything together. But anyway, they hit a billion dollars in funds under management, which is a massive milestone, right? That is, collectively everybody depositing like micro amounts of money into their account, it's sometimes as low as five bucks, thats what I've got my personal spaceship account set up to five bucks a week. This gets direct debited, and all those people like you and I Blaize and all across around Australia have now hit a billion dollars of funds under management, which is a massive achievement, it really is becoming like its own not to use the pun, but its own like universe of investing, which more and more young Australians are turning to so good on them. We're massive supporter of Spaceship. And if you haven't checked that spaceship, just give it a go log in, have a go. See if you want to deposit some money in there and maybe as an alternative to the current superannuation fund. And it's a really cool investment strategies that you can use so congrats to the team over Spaceship for everything they've achieved. I think it's a massive movement for FinTech and also an alternative way for managing money in Australia, which is emerging pretty quickly.

Blaize Pengilly  07:26

I can't believe you didn't use that opportunity to to say $1 billion.

Dan Jovevski  07:33

Well, I want to take away from you Blaizey. Thanks for that.

Blaize Pengilly  07:37

I have a silly question for you. Funds under management means that's a funds that people have invested through them. Is that right?

Dan Jovevski  07:44

That's correct. Yeah. So all right, this other like, vernacular that the really super technical people use which is just called fum or F-U-M, which is funds under management it means the same thing it basically means collectively they've got a billion dollars of individuals money under under management.

Blaize Pengilly  08:03

Yeah. All right. Cool. Thanks for explaining. I do have a personal money news story for this week. Dan, if you'll hear me I've a good one and a bad one. You ready? Good one logged into I missed a payment on my health insurance Silly me logged in to check it out, updated my payment details to be direct debit saving myself $57 a year. Boom. 

Dan Jovevski  08:25


Blaize Pengilly  08:26

Right? Avoiding that loyalty tax. The other one I found one of those fun rainbow light bulbs. You know the cool light bulbs that you can control via Wi Fi and change the mood of everyone. 

Dan Jovevski  08:37

Yeah, for sure. 

Blaize Pengilly  08:38

I've wanted one for ages. They are they were pretty expensive when they first came out and now they sit around 30 bucks a pop. I'm doing my groceries the other day. Boom. I find two for $6 off right so I'm like oh yeah, I'm excited. So I checked out got him home and do my lamp take my light bulb out of my lamp and I bought the wrong screw in so I thought that was a bit foolish. So what I went to do what I went to do is put the original bowl back in the lamp and I had broken the lamp so now I don't have a working lamp and I have three light bulbs that are in perfectly good condition that I can't use so kind of a fail but I'm still stoked that I found the discount and hopefully I'll find a lamp on roadside pick up or at a cool up shop secondhand so I can use my cool rainbow lights.

Dan Jovevski  09:27

Well those lights of great I've got one and they really awesome, sad to hear about your story but really good that you got an awesome bargain. That is a phenomenal price for something like that.

Blaize Pengilly  09:36

That's right. Anyway, enough about me and my bargains. Let's get on with the show and chat about open banking.

Dan Jovevski  09:43

Let's do it Blaize.

Blaize Pengilly  09:50

Now what is all the fuss about open banking. We touched on it last week with Marie from loans.com.au in her fabulous interview and from with Tim Poskitt, from Yodlee. But I thought we'd take an in depth look at exactly what open banking is and how it all benefit regular Aussies. From my understanding, it's gonna make the environment more competitive, and it will be easier to share data, but I don't actually really understand how it came to be, why how exactly, it's going to benefit us, and when it's happening. So Dan with your wealth of knowledge, please enlighten me what exactly is open banking or CDR?

Dan Jovevski  10:29

Why is that is a phenomenal question. And there's a little bit of confusion around what open banking is or what this term called CDR is. And I've heard some people talk about CDR, so there is a general awareness, but most people don't know. And you know what, that's completely fine. In essence, what the CDR is, is this really broad concept called the Consumer Data Right. And what effectively the Australian Government wants to do, is enshrine you as an individual to have complete and utter ownership of your data to use for whatever you want. Now, the first cab off the rank in this method for sharing data is banking. So when you hit open banking, your consumer data, right is the same thing. The Consumer Data Right is meant to be much broader. It's not meant to just cover banking, but it's also meant to cover other products and services, including things like superannuation, transaction accounts, electricity, telco, and probably other things in the future as well, where you can safely share your data in a permissioned way to third parties. Now, as a just really quick example, how does the open banking system work? Well, it's pretty simple. If you have a third party application, say like an application like WeMoney, you can provide permission from one of your banks, say, the National Australia Bank, to provide access to WeMoney of your data with your permission. And this is a complete revolution and game change. Because this is the first time that the Australian Government has mandated a system that forces banks, financial service providers, and probably soon to be electricity companies, and also telecommunication companies to provide your data that you find any third party that you'd like to provide you some benefit in the future. So when we talk about open banking and the issue of data, right, just think of open banking as being like the first cab off the rank, but with many, many more industries to come, later, that can help you take control of your data, then use that to benefit you.

Blaize Pengilly  12:34

Okay, I've got to say when I hear the word data, and Australian government in the same sentence makes me freak out a little bit, if you recall, back to the last census, and we had the data breach and ahhh makes me think a little bit ugh. But I'm sure it will be safe and secure. And they're probably taking a lot of processes to make sure the data sharing is secure. Why did the Australian Government decide to do this? Was there a particular event that happened? Or did the government just go Alright, let's do this and make it better for Aussies?

Dan Jovevski  13:05

Very good question, Blaize. And you know, what, Australia doesn't really take its cues from anybody around the world, right? We're an independent nation with a lucky country, we like to do things that are over a pioneering spirit of people. But in this case, what we did see in the European system was the Europeans announced something very similar to what open banking is about four to five years ago. And that system and regime was not just only in like individual countries like Germany or Italy, but it was like a pan European approach where individuals part of that you could share their data between institutions. And it basically allowed people to take control their data and share it at their will. And the Australian government took a lot of inspiration from that approach. And the number one reason why I think most people can get but, it is no secret that Australia is a very concentrated banking system with four big providers, Commonwealth Bank, NAB,  Westpac, and ANZ, controlling in some cases, some are up to about 85% of certain markets, like mortgages or deposit products, etc. In order to spur more competition, and to maybe break some of that monopolistic powers that the banks hold, is really to say to the banks, you know, what, we give you all this information and data, and you use that data to basically further entrench your position to be the top four institutions of Australia and not allow those smaller institutions to participate and help consumers. And that entrenchment is something that the Australian Government saw that they wanted to potentially open up and allow for more competition to enter into the Australian market. Now as a prime example of this as most listeners who may have heard these two facts before. Research conducted by a WeMoney suggest that 85% of people who have mortgage product are overpaying by significant margin and abouts 75% of people who have personal ones are overpaying by a significant margin as well. So when we go to our banks, people that we you know, often trust, which we'll touch on a little bit later, in today's episode, we may be overpaying because we've got the ability to easily log into our account, see an offer, click on the offer, obtain the offer. But that's not available for other institutions or other banks or other tier two or tier three institutions that really want to help you accelerate your financial goals in your life. So this is a great way for the Australian Government to make an open playing field for anybody who wants to participate in the open banking regime

Blaize Pengilly  15:41

With open banking, is just banks that are involved in the banking part, or are there other institutions or the service providers that can be involved in the open banking part of, of the Consumer Data Right?

Dan Jovevski  15:56

Yeah, look, it extends actually way beyond it. When we say banking, we often think about maybe institutions that have got a banking license, but the CDR is actually much more broader than that. It allows organizations that aren't banks to be part of the system as what they call data recipient, so for example, you know, WeMoney is currently undergoing its application to become a data recipient, which means that it can take data from the banks and safely transfer that to our system for people to use. And WeMoney is not a bank, you know, we don't intend to be a bank. But we get, we can also play in the system, like the consumer data, right. And it's not just WeMoney it's other organizations like third party data providers that provide the mechanism for you to transfer your data safely securely from platform to platform. So it's going to be much more broader than just the banks themselves. But the Australian Government, Blaize has targeted banks as being the mandatory first cabs off the rank to comply with the open banking requirements to make their data available. And as of today, 17 institutions now are what we call data holders, which basically registered to allow other people to obtain that data from them. So all the big four banks and majority of the second tier institutions and some third tier institutions also.

Blaize Pengilly  17:15

So when you say second tier and third tier institutions, do you mean? So we've got the big four, which is, you know, Commbank, NABm ANZ and Westpac and then would it be banks like ANP? 86400?

Dan Jovevski  17:27

Yeah, that's correct Blaize. It's much smaller institutions. So all those names Citigroup, Heritage Bank, Macquarie, Regional Australia Bank, basically all those other institutions that are not the big four - big four banks.

Blaize Pengilly  17:42

Okay, this is really interesting. So there's data holders, and then recipients, like you mentioned, like WeMoney, which is a great way for me to think about it, because obviously, I am very familiar with WeMoney, but it could be other banks and other other maybe budgeting apps or comparison apps as well, that would be able to be on the recipient receiving end of of data.

Dan Jovevski  18:03

That's correct. Yes.

Blaize Pengilly  18:05

All right. Awesome. So we've touched on it before, but what are the future benefits of open banking?

Dan Jovevski  18:10

Blaize this is a phenomenal question. And I just want to just paint a picture, or maybe just a little story about, you know, how we've conducted our financial lives, right? So we get into early 20s, we save up for a house, we buy a house, we get a mortgage, we live in a home, we've been there for about three to four years, but you know what? Life gets busy, right? You might be starting a family.

Blaize Pengilly  18:30

Sounds like a picture perfect life.

Dan Jovevski  18:33

It does

Blaize Pengilly  18:33

Buying a house in my 20s. Oh, my goodness in my dreams. But you know, it could could happen for some people.

Dan Jovevski  18:39

Well, good point, Blaize. And it could be your 30s. But life hits you in the face, and you get really busy. And there's bills that are due, there's doctor's appointments, there's things that happen in your life that make, you know, thinking about your finances really sort of boring, and, you know, putting off to one side, you always have that thought in the back of your mind. Yes, I should sort out my banking, yes, I should go switch. But the thought of doing that, and the thought of maybe going and say switching your mortgage, some people would rather have a root canal without an anesthetic, then go and switch their mortgage. Because it's so painful to think about, right? You've got to go and speak to a bank, you've got to go wait a line, you could await on a 1300 number, you know, hold music for like 30 minutes. I mean, who wants to do that nobody has got time to do that anymore. And the reason for that is, is because there's so much manual steps that you have to go through in order to optimize your money, your finances, but with open banking, that's going to change, it's gonna change quite dramatically. So if you think about a world of open banking, and I just want to stress, we're not here yet. It's still the very early days, it's still being developed. But if we just picture ourselves maybe 12 months or 18 months from now, what could the future look like? Well the future would be like this is that you buy a home in your 20s, your 30s you get a mortgage and you get the best possible rate at that time. But as we currently know, we've talked about before is that with time, banks change their products, they change interest rates, if you're paying a lot more money in the future, and you end up being, you know, quote unquote, a sucker, right, because the banks rely on your apathy, they rely on you not checking your product or your rates in order to get a better outcome. But, you know, in this future, you, the consumer, now have the power to take it to the banks. And you can take it to the banks, without not too much effort at all, in fact, I think Blaize, the future is going to be where you just press one button, or they call one button finance, or you press a button, you say, hey, goodbye, expensive mortgage, hello, cheaper mortgage, and hello saving $2,500 each and every single year, boom, done. And all that pain, that now you've done with a press of a button would usually take you like two and a half weeks to go through and manually signing paperwork going and speaking to people, sending back documents, finding issues and errors, getting your value when it comes to your property and see what your property is worth all that abstraction is going to go away with open banking. And Australians are finally, finally going to live better financial lives because they're not going to be beholden to big financial institutions that rip them off, day in, day out, month in month out year in year out. And the power finally is going to return back to the people where they can take control of their finances. That's the vision and that's the future of open banking is allowing you to seamlessly take control your finances, get the best possible outcome and live in a world where competition is high, prices are low. And then you can spend that money on doing the other things that you want in your life. And I don't even want to guess what the number is of how much people are overpaying on their mortgages in Australia Blaize, but I'm going to put a nomber out there, it's probably the multi billions of dollars. And dare I say could potentially even be, you know, close to the trillion dollar mark because of that friction that's involved with people to sticking to the rate of the banks and paying too much money. And just to give you an example, I'm gonna give you a really practical example. This is what we can currently see here at WeMoney. Right?

Blaize Pengilly  22:25

Hit me 

Dan Jovevski  22:27

You know the best possible interest rate you can get at the moment is probably around sort of 1.99%. Right?

Blaize Pengilly  22:32

Is that the comparsion rate? Or the interest rate?

Dan Jovevski  22:35

That's interest rate and the comparison rate for this particular mortgage provider. Right. Okay. So you'll be paying a rate somewhere around 2%. But we've seen people with interest rates of 3.5% to 4%. Right? So you're talking about, like literally 1.5 to 2% more than what you should be paying, right. And those people probably think of themselves exact same as the person that's running around have a busy life, when could we find the time to get to, you know, refinance my mortgage, you know, never because it's going to take too much pain and effort until something really critical manifests, we used to take like days and days of work. And so that could easily be like three and a half $4,000 On a typical average $500,000 mortgage, that people are overpaying on each and every single year, right? And then you multiply that obviously, by 25 or 30 years, you can tell us multiple hundreds of 1000s of dollars that people are overpaying. So Blaize, I think the future is bright. The Australian Government is moving in the right direction with this regime. And I think Australia's gonna be much better off in the future.

Blaize Pengilly  23:43

I got chills, Dan, can hear the passion. And if you're listening, you can't see our faces unless you have some sort of weird skill or some incredible psychic skill. But I can see your face right now Dan, and you are lit up. It's so awesome seeing you. I know you're super passionate about people and their finances and people not being ripped off. So it's really really cool to hear that it's happening your voice and I think open banking sounds like it's gonna be really awesome. I think this is going to be really, really fantastic for us. We've discussed loyalty tax before or the lazy tax or apathy tax, whatever you'd like to call it. If you'd like to learn more about that it's we cover it in depth in Episode 27 with Tim Nicholas from Get Reminded, but if you're tuning in going what exactly is loyalty tax? It's not actually a tax. It's the difference between the price you're currently paying with a service provider, whether it be home loan mortgage credit card, (well home loan or mortgage is the same thing) but home loan and credit card could be any service like a phone service or your gym membership. And it's the difference between that and the price that you could be paying if you shopped around for a better deal. So rather than you having to manually do the shopping around it sounds like this one click solution is going to really eliminate All of the friction when it comes to switching and finding a set a better deal and saving money, which sounds pretty great. I mean, if I can take a kick back and click a button instead of take a lit pitchfork to a bank to get some change happening, then I'm all for the I'm all for the button. I think the button is a much easier solution.

Dan Jovevski  25:20

Absolutely Blaizey.

Blaize Pengilly  25:24

If you are wanting to get better with your money, or find any cool deals, bargains, money, tips or tricks, get the WeMoney at and check out the WeMoney community WeMoney community is a place for you and other like minded people to get together and share awesome money, tips, hacks and ways to save. It's free to download and use, you can get the WeMoney app from the Google Play or the Apple App Store. And if you use the code word podcast, you'll earn $5 on signup when you connect an eligible bank account, all right, back to the show.  Dan, in layman's terms, what is the process that banks or lenders need to go through to become part of open banking? Like what is the I'm assuming there's some I mean, it's the government's idea, right? So there's probably a lot of red tape and a lot of systems to go through. What What do banks, what do lenders have to go through? And how are they making sure that the data will be safe and secure?

Dan Jovevski  26:24

Great question Blaize. And I think listeners will be very pleased to know that the government is taking additional steps and measures to ensure that people that are involved as part of the consumer data right as either data holders or data recipients have to go through a pretty rigorous process, identify security checks and controls and go through some certification processes in order to become accredited. And that accreditation process, it's not like you just apply, you fill in the online form and boom, you become a data holder or recipient - it's completely opposite of that. There's a lot of engagement with the government organisations, like the Treasury Department, where you have to go through a process of showing the government, all your security practices and controls and how you're going to keep that data safe to make sure that only the people that data is intended to be accessed does access it, and that data doesn't leave the system without the user's permission. And so that process should give consumers a lot of confidence, the government's taking very a cautious approach to only allow people that can go through that really rigorous checking and double checking and certification process in order to become either data holders or data recipients. So in layman's terms, Blaize, people that are going through this process have been vetted and verified by the government. And that should only increase consumers benefits of knowing that they can trust the open banking system to have their data securely transferred from one provider to another.

Blaize Pengilly  27:44

All right, awesome. And this might be a silly question, but why can't I already just take my data elsewhere? I mean, if it's if it's my data, surely I can just move it around as I please. Like, if it's up to me, why can't I already do that? Or can I?

Dan Jovevski  28:01

Well, Blaze, we're living in a world where some people just decide to drive on the left hand side of the road, and some people decide to drive on the right hand side of the road. You know what, that is just a recipe for disaster. And just think about that analogy when it comes to your data, and how how you might be able to transfer that to one party, the other, there is no centralization. So there's no common agreement among providers about, hey, what does this particular piece of data mean? How can we standardize that to make sure that we know that what it means what it is, so when you take it from party A to party B, or party C or party D, it all means the same thing. And what the government has done is effectively introduced a standardization process to make those every single data field standardized. So if something means something, it means something doesn't matter, where you take that data, and currently just doesn't exist today, everybody's pursuing their own definitions of what they consider as, you know, a transaction whether they consider as you know, an account. Because that variance is so big, people can't agree by themselves. So the government's had to step in to standardize that approach. So everything is uniform, and the same. And the government has actually done a really good job of that, and they've gone through a massive consultation process with a lot of providers to say, Hey, this is what this means. And when you take this data from one party to another, it's going to be exactly the same thing.

Blaize Pengilly  29:19

Alright, awesome. And what will this cost? Do I have to pay for open banking

Dan Jovevski  29:25

Directly? Nothing. So most applications that are currently being bought so far, don't charge you to access banking, it's just a regular part of the services which is really good. Now that's not to say that there might be some services that may charge a fee for a service that includes open banking, but to use open banking, there's no like toll gate. It's not like you're going you know, through Sydney or through Melbourne, and you go past a toll bridge and you hear that all beep. None of that stuff.

Blaize Pengilly  29:50

Drive on any road in Sydney and you hear that bloody beep oh my goodness, that many toll roads. Far out I do not miss that. 

Dan Jovevski  29:58

That's it. And I think this is part of the Australian Government's approach to ensure that the adoption rate and people using open banking is sufficiently well adopted and cost doesn't have to be a barrier for them to do it. So they're really interested in now just the adoption and people giving it a go and getting used to it. And once more people get used to it will become a commonplace like in 10 years time, Blaize, we'll be waking up and going, hang on - Why didn't we do this like 30 years ago, 40 years ago? We'll be in that will be that frame of mind for sure.

Blaize Pengilly  30:25

All right, super interesting. Now, Dan, are there is there anything else around open banking or the consumer data right, that I should know?

Dan Jovevski  30:34

Well, guys, I think there is quite a few things that Australians should be very excited about. Now, what we consider open banking, we're talking about this concept of sharing your data, right? So you with the NAB, your spending and your transaction account, you've got, say 100 transactions there, you can take those transactions and provide them to a third party that may help you optimize your finances or things like that. But it doesn't stop there, the pathway and roadmap to open banking is going to be much more involved. And there's a current consultation process underway with a regulator that is going to allow something else called payment initiation. So just imagine this, right, you go into an app, you have got four different bank accounts, you want to transfer money from one bank account, say, from the NAB to the ANZ, you're using a third party app, say, for this example, say WeMoney, you can now press a button and transfer money from your Commonwealth Bank account, your Westpac account, but you can also deposit money to your Spaceship account, you can go and pay off your home loan, say with Athena, you can do all these things without having to go into your direct banking app. And now, this is a real game changer. Because we've talked about this concept of like, read only, we just read your data that you already hold. But now you have the ability to have right access. So you can now transfer your money from account to account without having to go to your mailbox again. Yep. And I'll tell you what Blaize. This is scaring the pants off the banks, right? Because the banks no longer have the visibility of seeing that customer go inside their banking application in order to perform these transactions. And if we look at the European market, something like the UK, this started off very small. But now people are getting used to using it all the time, there's going to be some other weird and wonderful combinations of how you might be able to do this. So yeah, it's gonna be really interesting to see this new world where the freedom of using your data, the freedom of transferring your money is going to become much more seamless than what it currently is now.

Blaize Pengilly  32:43

Yeah, interesting. I just opened up my CREAM, cash rules everything around me folder on my phone, where I keep all of my banking apps, and there's nine in there. So if I wanted to transfer money between any of these accounts, it's got my macro investing, it's got my superannuation, and it's got my savings, blah, blah, blah, blah. It's got everything in there. If I wanted to transfer money between all of those, what I could do is with right access in the future, I could simply look into one app and move it between all of them, which sounds like less clicks than I would currently have to do, which is a win for me. Because, as everyone I'm sure everyone can appreciate. We're all becoming increasingly time poor. So yeah, it sounds like it's making it far simpler.

Dan Jovevski  33:27


Blaize Pengilly  33:27

All right. Well, thank you, Dan. Open banking, it's got I think it's got my ticket for approval. That sounds pretty good to me. When do you think it will be fully in effect, like so when we started a couple of banks? I think you said 17 providers currently, on board? How long do you think until were like fully in the throes? Yep, open banking, let's go. Everyone's on board.

Dan Jovevski  33:47

I think that now 17 institutions that are registered, I think it's going to be you know, the next year, probably, I would say 100. And then probably after that, probably somewhere around two to 300, possibly even more. And because of the scope of the consumer data right is going to expand away from banking into other areas when so financial services, things like superannuation, things like energy, because like telco is going to be a much more diverse playing field of being able to share your data. So I think, probably in five years time, I think people often think that things accelerate at a real speed. But sometimes it takes time, it takes a lot of people to use the service once, tell their friends about it, tell them how easy it was - that just takes a lot of time. But the ramp off is big. Once we get to a real critical mass of people using it, it will just become commonplace. I predict in five years time that we will have the ability to automatically switch our mortgages, switch our personal loans, switch our car loans, switch our insurance providers, switch our telco with just the press of a button. And so I think also aswell Blaize, it's going to be not even a press of a button anymore. You're going to tell you're going to tell like an app, you're going to say Hey, would you find the lowest price just automatically switched me Don't even bother asking me I just want to save money. And that's a world where I think we're marching to - I predict in five years time, we're going to walk into that reality.

Blaize Pengilly  35:06

All right, I look forward to it. Thank you Dan.

Dan Jovevski  35:13

Well, thanks for tuning in to another episode of the We Talk Cents podcast and we'll be back again next week. The biggest favor that you can give Blaize it is he sharing the We Talk Cents podcast with somebody that you care about - a friend looking to improve their finances. Just send it across on Spotify or Apple and tell them to tune in to an episode that you found valuable in your life. That's the biggest favor that you can provide us

Blaize Pengilly  35:36

And if you are feeling generous, and like you would like to give us a little present for hitting 10,000 listens and 100,000 downloads which is incredible. Please do us a favor and leave us a review on Apple podcasts. That would be the greatest gift that you can give sharing the money news and helping other people find us by sharing a review. Thank you again for tuning in. We will be back next week. Have a lovely week ahead and we'll catch you next time on We Talk Cents. 

Dan Jovevski  36:03

See ya 

Blaize Pengilly  36:04

Good bye!



The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.

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