Open data carries privacy risk: ABA

Open data used by banks and fintechs to innovate and cross-sell products must be underpinned by robust regulation that protects the consumers, otherwise they risk major privacy breaches, according to the Australian Bankers' Association.

Educating customers how their data may be used and ensuring an appropriate and well-understood consent regime is introduced were the critical issues that emerged from a recent ABA industry conference.

Consumer groups, regulators, fintechs and banks that took part in the roundtable discussion found it imperative to develop a thorough understanding of how open data affects vulnerable customers, including the implications around product access and predatory lending.

Choice head of campaigns Erin Turner, who took part in the event, said that it's time to "move beyond education" and focus on the systems and regulatory interventions that protect consumers.

One of the biggest risks of open data relates to companies and banks innovating, which doesn't necessarily deliver positive outcomes for consumers. She used the need for regulation around payday lenders that ask for access to bank accounts as an example.

"What we don't worry about is that those payday lenders are then using that data to re-market to those consumers to say, 'Ah, look, they're nearly at the end of the loan, or they look like they're struggling right now. Let's offer them another very toxic payday loan,'" she said.

Fintech Australia chief executive Danielle Szetho, who also spoke at the event, said her organisation has been working with regulators to facilitate innovation in a way that protects consumers.

Any business that is working with consumer data is dealing with trust, she said, noting that fintechs in particular don't have the massive balance sheets or the backing of major institutions and can't afford to "stuff up" customers' data.

If there are companies that are mindful of breaches or issues in this space and watching for that very carefully, because they cannot afford to slip up, it will be fintechs, she said.

"So we have been thinking about that very, very closely. And I think you will certainly see a lot of work from us in that area," Szetho said.

Read more: OpenABAAssociationAustralian BankersDanielle SzethoErin TurnerFintech AustraliaLet
Editor's Choice
ALEX BURKE
AMP Capital has appointed a new head of its institutional and corporate business.
ALEX BURKE
AustralianSuper appointed a new chair for its investment committee.
ALEX DUNNIN
A Rainmaker study of extra benefits and features being offered by super funds in Australia reveals that technology and communication-oriented features are the most active area of product development.
ALEX BURKE
An $81 billion international investment manager took the majority stake in a large Australian provider of specialist medical software.
Videos
Brought to you by
19 APR 2017
There are two main avenues for investors to think about when approaching the use of alternative beta in an investment portfolio. The first is to adopt a core/satellite approach to constructing an alternatives ...
Get it Daily
Keep up to date, don't be the last to know! Get the Financial Standard Daily Newsletter.
SUBSCRIBE
Products
Pocket investment guides featuring adviser case studies and a glossary.
Investing trends and strategies from the industry’s thought leaders.
Putting the spotlight on investment products that matter.
Expert Feed
Andy Marshall
FS ADVICE
Rethinking client engagement
Financial advisers who take the time to understand their clients' personality, emotional intelligence and learning styles stand a better ...
Stephen Fay
FS SUPER
Landscape changes with potential for super implosion
Changes to default superannuation outlined by the recent Productivity Commission report have potential to fundamentally alter the landscape ...
Christopher Page
FS PRIVATE WEALTH
Redefining the family office
While the family office model has traditionally been the preserve of the ultra-rich, this may be changing very soon. Last week, Findex ...
Michelle Baltazar
FS MANAGED ACCOUNTS
Hitting the mark
Ten years from now, every financial adviser in the country will be offering their client a managed account solution. It may happen ...
Featured Profile
Professional Subscription for $295
(inc GST) for 1 year.
SUBSCRIBE
OTHER PUBLICATIONS
FS Advice
The Australian Journal of Financial Planning.
Get the free iPad app
Download the Financial Standard iPad app for FREE.
DOWNLOAD
Link to something EvamYNTC