Japanese startup Moneytree has announced the launch of its personal finance application in Australia, providing consumers with the ability to view their financial data -- including savings, loans, credit cards, loyalty cards, superannuation, and shares -- from different providers in one central location.
The launch follows the federal government saying it is looking into introducing an open banking regime that would see Australian banks opening up customer data to customers and third parties such as competing banks, startups, and other financial institutions by July 2018, following recommendations from the Australian House of Representatives Standing Committee on Economics.
Paul Chapman, co-founder and CEO of Moneytree, told journalists on Wednesday that Australian banks are anxious about the open banking regime; specifically, about how data sharing initiatives will be implemented, as well as the initial and ongoing costs associated with building and managing APIs.
"There are factions in Australia thinking that 'oh great, the government is going to make the banks do this'. In our discussions with big banks and small banks, there's a lot of anxiety ... we've seen the same thing in the EU," Chapman said.
"On the flipside, if they don't open up enough, where's the innovation going to come from? The things that banks can't do by themselves, that maybe innovators, smaller companies can, where will that come from?
"So we're looking for the middle path. That's our policy and our approach in Japan, and that's what we're trying to bring to Australia."
In March, Westpac CEO Brian Hartzer said the bank supports enhanced data sharing with third parties, but highlighted the importance of getting the implementation right in order to protect customers from fraud, privacy breaches, and inappropriate use of their data.
"A significant data breach under a new regime would undermine trust and confidence in data sharing and ultimately impact our shared objective of increasing transparency and innovation in the sector," Hartzer said on the final day of the Standing Committee on Economics review of the performance of Australia's banking and financial system.
Chapman said data sharing initiatives in Australia will fail without ongoing support from consumers -- otherwise known as a "social licence" -- and such support can only be attained if consumers understand and trust how their data is being used, especially financial data.
He noted that technology, while important, is just one component in the shift towards "connected banking".
"People make the mistake of thinking this is about technology when it is actually about a revolution in trust," Chapman said.
Rather than waiting for enhanced data sharing between individuals and financial institutions to really kick off in Australia, Moneytree wants to start the process now. Chapman said the company already has the technology -- it's been around since 2013 -- to make it happen.
Moneytree's permission-based data aggregation and sharing platform LINK, which powers the company's personal finance app, provides financial institutions with API access to more than 2,600 data sources in Japan alone.
While the technology is embedded into a client's mobile banking app, Moneytree said the consumer has "full control" over the third-party data sources being accessed by that bank, so their data is not sold to third parties for targeted marketing or advertising.
The consumer can decide whether their financial institution gets one-time access or ongoing access to certain data sources, and they can switch access on and off at any time.
According to Moneytree, the benefit for organisations is that they have access to not only more but also up-to-date data, which translates to cost savings for business.
Nathan Kinch, head of experience and labs at Meeco, a platform that allows individuals to save, share, and sync their personal information across their devices, previously told ZDNet that the opportunity to deliver products and services to the right person at the right time increases exponentially if organisations are able to acquire and utilise timely and accurate consumer-controlled data.
The five-year-old Tokyo-headquartered company said the development of a set of agreed security, privacy, and transparency standards is a key step moving forward. Specifically, Moneytree suggested that the sale of customer data be avoided, as there are better ways to monetise data. However, operators that are inclined to sell customer data should be required to inform customers exactly to whom their data has been sold and the exact purpose for which the data will be used.
Additionally, Moneytree suggested that privacy policies be written "in the language of users, not legalese", and that consumers should be notified in real time of material updates to privacy policies.
Consumers should also have a sense of control over their data and should be able to explicitly opt in at all points of the product or service lifecycle, according to Moneytree. People should also be able to opt out via the service where the data was first shared, rather than having to chase up multiple "partner" companies who subsequently have access to the data.
Moneytree's suggested standards coincides with the independent body Data Governance Australia (DGA) unveiling its draft Code of Practice for public consultation as part of its effort to set industry standards and benchmarks for the responsible collection, use, management, and disclosure of data.
The draft code [PDF] places a heavy focus on doing "no harm" to the customer when collecting, using, or disclosing their personal information, as well as ensuring all steps have been taken to ensure anonymised data cannot be re-identified, which the government is looking to criminalise. DGA also suggested in its draft code that organisations appoint a dedicated officer to oversee data activities.
While the future is uncertain, Moneytree believes open APIs could lead to cashless settlements not using a credit card network; and that retailers and ecommerce businesses would be particularly compatible with connecting to bank APIs, with the possibility of "white label" banking becoming more common.
But the first phase of the open banking model will result in "unprecedented convenience" for consumers and SMEs, according to Moneytree. Consumers will be able to complete a tax return in minutes, and apply for credit cards and financial products and get instant approval, while SMEs will be able to avoid lengthy customer verification processes.
Technology consultancy firm Capgemini published a report recently which stated that using APIs will allow banks to innovate while bypassing issues of technology incompatibility, as well as allow them to push new services out sooner than previously possible.
Ultimately, the future success of banks will require a shift towards a more open banking model, which the consultancy firm said will result in "uncorking the creativity" of third parties and generating opportunities the industry has not experienced before.
"Getting there, however, will require careful planning, and compel banks to make strategic choices about how to evolve their business models," the Capgemini report states. "With technology firms proving their power to delight customers, banks need to act now to ensure they remain a key part of the equation."
Since its founding in 2012 by Chapman, who is originally from Melbourne, and American entrepreneurs Mark Makdad and Ross Sharrott, Moneytree has garnered around 1.5 million users across its iOS, Android, and web-based applications, and claims to reach "millions" more through LINK.
The platform has more than 10 major corporate clients, including Japan's two largest accounting software vendors and an industry-first inbound APIs with Mizuho Bank and SMBC.
The company has raised more than ¥1 billion to date from the venture capital arms of Japan's big three banks Mizuho Capital, Mitsubishi UFJ, and Sumitomo Mitsui Banking Corporation, as well as Salesforce Ventures and "unicorn hunter" Baillie Gifford, which usually invests in publicly listed companies.
Moneytree's personal finance app integrates with 20 data sources in Australia including all the major banks and loyalty programs.