The Australian government confirmed the plans in response to recommendations made following an independent review published earlier this year.
The new open banking regime, which is to be introduced in phases, will be implemented as part of a new 'consumer data right' that the Australian government committed to introduce in November last year.
The open banking reforms are being driven by a desire to encourage innovation and new third party services in the market, but the Australian government has promised that access to bank data will be restricted and subject to privacy and security safeguards.
"Customers will be able to use their new data rights to find better deals on their credit cards, mortgages and other banking products," Scott Morrison, Australia's treasurer, said. "Comparison services will be better able to assess the value and suitability of all available products, taking into account the individual circumstances and needs of the customer. This will help to break down barriers that see customers staying with their banks even when there are better deals elsewhere."
"Open banking will also allow entrepreneurs to develop new services and products tailored to customers’ needs, disrupting those existing business models within the banking sector that do not put customers first," he said.
"Importantly, the government has committed to the blueprint proposed by the review for ensuring strong privacy protections and information security for customers’ banking data. A key element of these protections is that only trusted and accredited recipients will be permitted to access data, only with customers’ express consent and only for the purposes the customer has expressly permitted," Morrison said.
In the first phase of the open banking regime, all major banks in Australia will be required to make data available on credit and debit card, deposit and transaction accounts by 1 July 2019, while data from mortgage accounts must be opened up by 1 February 2020. Data relating to all the other products that the review identified, including retirement savings accounts, foreign currency accounts, business finance and personal loans, must be available by 1 July 2020.
The open banking reforms will apply across all of Australia's banks, although the timescales for compliance has been extended by a year from the deadlines that apply to the country's major banks.
The Australian Competition and Consumer Commission (ACCC) "will be empowered to adjust timeframes if necessary" and will be "responsible for promoting competition and customer-focussed outcomes" under the open banking regime. The Office of the Australian Information Commissioner (OAIC) will be responsible for ensuring privacy protections under the new framework.
An open banking framework has already been established in the UK.