Open Banking is revolutionising global finance – can Australia keep up?

Today, technology shapes almost every aspect of our lives – and banking is no exception.

In recent years, one innovation has stood out for its potential to change finance as we know it: Open Banking. But what exactly is it, and how does it impact us?

Dr Priya Muthukannan, a digital transformation researcher at The Australian National University College of Business and Economics, has recently studied the historical evolution of Open Banking and how it’s been governed to date.  

She explains it in simple terms.

“Imagine your financial data – all those transactions and account details sitting inside your bank,” Priya says.

“Open Banking allows us to hand that information to someone else you trust, in a safe and controlled way, so they can do something useful with it.”

By allowing accredited third parties to access financial data safely, Open Banking is already giving people more control over their data, improving their financial decision making and streamlining old-fashioned processes.    

“Think about applying for a home loan. Instead of digging out three months of bank statements and uploading PDFs, the lender can now get a secure, instant view of your finances,” Priya says.

“Similarly, if you open a budgeting app, it can pull in all your accounts automatically. That kind of seamless experience is possible through Open Banking.”

“Before this shift, your financial data was basically stuck. It sat inside your bank, and if you wanted to do anything with it you had to print statements, fill in forms, and wait days for a decision."

“What used to take a week of paperwork can now happen in seconds. And that's not just convenient – it shifts the power balance back toward the customer.”

In Australia, Open Banking was introduced as part of a government‑led reform known as the Consumer Data Right. It began rolling out in 2020 among the country’s ‘big four’ banks – CBA, NAB, Westpac and ANZ – before expanding to smaller banks between 2021 and 2022.

Since then, this national framework has continued to expand but compared with more mature regimes overseas it still hasn’t realised its full potential.

“Europe’s open banking, especially under the European Union’s Revised Payment Services Directive, has been around longer and has already led to clear benefits like lower payment costs and more competition,” says Priya.

“Adoption in Australia is growing, but still not universal in how people use it. We are not yet at the point where Open Banking is changing the daily experience of most Australians.”

Open Banking is not only about convenience, it also has demonstrated having a social impact – such as supporting women experiencing economic abuse and reducing fraud.

“When Open Banking is designed with vulnerable people in mind, it can actually be a tool for restoring someone's financial independence,” says Priya.

“For instance, a survivor of financial abuse with debts in her name incurred by a partner can use Open Banking to provide a detailed, authenticated transaction history to a financial counsellor or the bank to prove the debt was fraudulent.”

How safe is Open Banking?

Open Banking shifts financial data from institution‑specific silos into an interconnected ecosystem in which customer‑permissioned information flows between banks, fintech firms and data intermediaries.

But sharing vast amounts of data – even in the public interest – brings new challenges that regulators must take seriously. Cybersecurity is at the top of that list.

“The main risk is data breaches,” says Priya. “As more parties access financial data, there are more points of vulnerability.”

“A hack of a major bank's customer database isn't just a privacy violation; it's handing criminals a complete financial biography of millions of people."

“There is also the risk of social engineering or phishing, where attackers exploit Open Banking processes to trick users into granting them access.”

These concerns sit alongside broader questions about consumer consent and awareness.

“People may share data without fully understanding what they are agreeing to, which can lead to misuse,” she says.

According to the CBE researcher, strong security standards, clear consent mechanisms and ongoing monitoring are critical to ensure the benefits of Open Banking outweigh the risks.

With great data power comes great responsibility

Open banking inevitably makes banks extraordinarily data‑rich, giving them visibility into people’s full spending history, income patterns and financial behaviour.

Priya says this creates another subset of risks, especially as Artificial Intelligence becomes embedded in financial decision making.

“The danger is that algorithmic systems trained on historical data can encode existing biases, denying credit to certain postcodes, demographics, or spending profiles in ways that are hard to detect or challenge,” she says.

“There is also the possibility of data being used against us commercially. Banks can use behavioural data to time product pitches when we are financially vulnerable, or price products differently based on what they think people will accept.”

Priya’s latest study offers key insights for policymakers tasked with digital platform governance.  

“Our research emphasises that Open Banking shouldn't be treated as a one-off regulatory event,” she says.

“Policymakers need to view it as an evolving institutional framework requiring adaptive oversight, meaning regulation has to keep pace with the ecosystem as it matures.”

“Also, while Open Banking was designed to increase competition by lowering entry barriers and promoting interoperability, its platform-based implementation introduces a structural tension: mandating openness can inadvertently create new forms of data-driven monopolies."

“Our research calls for regulatory frameworks that actively prevent exclusionary practices, particularly those that disadvantage smaller fintechs who depend on incumbent platforms to scale, which can reinforce rather than reduce power imbalances.”

Building a fair financial future

Priya sees today’s financial system as a huge digital platform where everything is interconnected.

“It is no longer a collection of separate institutions. It’s an interconnected ecosystem where banks, fintechs, payment networks and technology companies are all linked together through digital infrastructure,” she says.

But when systems intertwine this deeply, failures in one corner can cascade across the whole. Effective regulation, Priya argues, must therefore take a holistic view.

“We need to move away from the idea that governance is about regulating individual entities and start thinking about regulating ecosystems and behaviours,” she says.

“The old model was designed for a world where the players were clearly identifiable and stayed within national borders. Platforms don’t work that way. A single app might draw on data from dozens of sources, operating across multiple countries and affecting millions of people while sitting outside the traditional regulatory perimeter.”

Priya cautions that, without careful oversight, the digitisation of financial systems can reinforce inequalities in Australia.

“If we build a data-driven financial system without thinking carefully about consent, inclusion, and accountability, we end up with something that works brilliantly for people who are already doing well and leaves everyone else further behind,” she says.

“But if we understand it well, we can design systems that are fair, inclusive, and secure.”

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Image credit: banner image: YURIMA: shutterstock.com; Priya Muthukannan: Tim Rendall/CBE