Opinion Digital Banking

What Australia can learn from the UK’s Open Banking experiment

12 months on from the launch of the Customer Data Right regulation a few of the UK's own open banking challenges are worth paying attention to by Australia's fintech and banking community, writes Zopa's Tim Waterman.

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It’s been a year since Australia waved in an era of open banking in what was considered a revolutionary move to improve the way Australians engage with their finances. Following Australia’s introduction of the Customer Data Right, which allows consumers the right to share their data between service providers, the appetite for open banking has been strong.

In the UK, we’re used to watching Australia lead developments in financial services areas such as pensions, but with open banking, it’s been the UK that’s made the first move. Following the launch of the Payment Services Directive Two (PSD2) in 2018, requiring banks to share their data with third parties, the UK now has more than 2.5 million consumers and businesses using open banking enabled products, with more than 300 fintechs within the ecosystem.

Although the regulatory set up in Australia differs from the UK, the principle behind and customer opportunity of open banking is the same. With one year down, there is much that Australia can learn from the successes, and importantly the mistakes, of the UK’s open banking experience so far.


Open banking offers a huge opportunity for people to access solutions that are not currently offered by the major banks. It enables consumers to access a broader range of services and products, which in turn leads to better and slicker customer experiences.

It can even help those with thin file or negatively impacted credit histories gain access to better financial deals and credit, as the data provided through Open Banking gives a more holistic picture of an individual’s financial situation. An example of this can be seen through our recent partnership with ClearScore which is the first time a credit marketplace and a credit card provider has teamed up through open banking to help those currently locked out of fairly priced credit products.

An encouraging regulatory environment is key - the UK Government and the regulator are supportive of fintech, and actively encourage innovation to drive better customer outcomes. This has created the right environment for open banking to thrive, aided by initiatives such as the ‘regulatory sandbox’ which allows ideas to be tested and developed in a controlled environment. And clear technical standards, set by Open Banking Implementation Entity (OBIE), mean it’s easier for firms to develop apps.

It’s natural for people to be wary of sharing their financial data. Consumer protection, especially with regards to data privacy, is therefore crucial to fostering trust among businesses and consumers. In the UK it was GDPR and in Australia open banking is being framed as a Consumer Data Right, which should aid adoption. One thing is clear though – when people see the benefits of sharing their financial data, such as slicker, quicker experiences and ease of accessing wider financial products, the uptake of open banking from consumers is greater.


Perhaps the most significant missed opportunity that Australia might learn from was to put a consumer voice at the heart and to understand what they want. In the UK there is a void for consumer education on open banking, with still more to be done to highlight the benefits, safety and opportunity to consumers. Australia has the chance to set this from the get-go.

Adoption in the UK has been slow.

According to the Open Banking Implementation Entity (OBIE), only 3 million people were using Open Banking at the start of 2021. In part, this will be due to low levels of consumer understanding but progress was also hampered by a lack of compelling Open Banking products.

In its first few years, open banking infrastructure made it hard for firms to innovate their product and create great customer experience; initially open banking APIs had poor availability and performance, key data elements were missing and customer authentication needed improvement.

Where the benefits are obvious, customers will follow. It is important that Australian banks, both traditional and challenger, work together to ensure that issues such as we saw with API data in the UK are avoided.

Finally, the UK open banking system still often relies on using batch processing which is preventing access to real-time payment data. The slow delivery of payment due to this latency increases customer anxiety as money appears to be lost in the ether. This risks damaging trust in the system, as well as draining internal resources for payment providers dealing with unnecessary customer complaints.

The pandemic has created great momentum for open banking as people have increasingly reached for digital financial solutions. Banks in the UK, traditional and challenger, are seeing the true potential to help the consumer through open banking. It took three years and a pandemic to get to this point, but Australia will be able to maximise on this potential faster with the learnings from the other side of the world and respond accordingly to ensure the promises of open banking technology are realised by consumers.

Tim Waterman is Chief Commercial Officer at Zopa. The views and opinions expressed are not necessarily those of AltFi.

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