Is Open Banking (Finally) About To Have Its Breakout Moment?

Is Open Banking About To Have Its Breakout Moment (Finally)

The breakout moment for an actor is the big one. It’s the difference between $20 million paychecks and three divorces, and a life of waiting tables with not enough money for a girlfriend (wait, has someone been reading my diary?!)

Think: Matt Damon in Good Will Hunting, Julia Roberts in Pretty Woman, Bruce Willis in Die Hard, and home-grown larrikin, Paul Hogan in Crocodile Dundee (one of my Dad's favourite films).

Believe it or not, the same thing can happen in financial services and Open Banking.

You see, a shift is happening.

Not yet an avalanche, but more than a snowball.

In the past three months, three significant players in the consumer lending scene have emerged: one very big, one merely large, and one worth maybe $50 million (but doing huge volumes regularly). They have tiptoed out of the darkness and begun to bask in the glorious light of Open Banking.

To be crystal clear, this looks like this:

Company A - ASX-listed circa $1 billion market cap

Company B - ASX-listed circa $300 million market cap

Company C - Privately held circa $60 million market cap (est)

Decent little roster, eh?

The Shift to Open Banking

What is this Hades-like gloomscape they’ve been set free from, and what is this utopian scene they now find themselves in?

Well, they no longer process loans using “screen-scraped” bank data. Instead, they are becoming tanned (but not burnt) in the luscious glow of Open Banking.

This is both significant and a signal (to me, at least) – a significant signal, if you will – and could just be catalyzing for Open Banking in Australia.

Let me explain why.

The Backstory

Consumer finance providers (i.e., lenders) have been early adopters of using electronic bank statement data to make lending decisions. This is primarily because your bank transactions reveal a more granular and accurate picture of your ability to repay a loan and not go rogue.

Simply put, if the eyes are the window to the soul, the bank statement is a window to the wallet. It picks up on rogue or risky behaviour that conventional credit checks may miss – like many other Buy-Now-Pay-Later accounts.

Back in 2014, these non-bank lenders (including Fintech non-bank lenders and ASX-listed lenders like WiSR, Plenti, Money Me, etc.) started using online banking statements to provide quicker, faster, and often instant lending decisions. In exchange, the borrower would provide their banking credentials for a fast, online ersatz credit check.

Wage advance providers came a little later but were onto it too. BeforePay (the listed Fintech formerly known as Cheq) could approve a loan and have money in your bank account in seconds using this screen-scraping technology.

The offer to the consumer was simple: do you want your loan in three minutes or three weeks, Mr Customer?

Three minutes? Just enter your online banking details here, and we’ll do a quick check.

Three minutes later, money is transferred, and the consumer is delighted by the whole experience.

It’s a quick, simple, painless, risk-free (mostly) experience that disrupts a slow, cumbersome, friction-filled process – that’s Fintech right there, folks.

Other notable examples of this simple mission include:

• Wise: International money transfers without delays and costs.

• UP Bank: Consumer banking without branches.

• Stockspot: Robo-financial advice without chunky advisor fees.

• Raiz: Passive investing for millennials (originally).

  
  

The Now Story

Open Banking is chugging along, like a cockroach you can’t kill. Honestly, you could also say the same thing about screen-scraping.

There are two ways of ingesting data to provide a speedy lending decision: one is Government-mandated, regulated, 100% secure, and a person’s bank data is ring-fenced and can’t go elsewhere (or be sent elsewhere) or sold.

The other is less secure, non-regulated, and a bit more wild-west-y in terms of where your data might end up. Some banks are putting the blockers on it, and there’s the spectre of the governing body finally taking steps to “ban” screen-scraping, as has happened in the UK.

Currently, these two methods are coalescing, each doing virtually the same thing side by side. This puts Fintechs and banks alike between a pig and a poke. Sad times…

This is one of the key reasons why the “Open Banking isn’t working - there’s little customer uptake” trope is still being rolled out.

But here’s the good part: Open Banking usage is growing – and growing fast.

The Global / Local Thematic

For all the naysaying locally, Open Banking is happening in over 90 countries globally. Many, like Brazil and the UK, are going gangbusters.

Mastercard tipped $1.1 billion into acquiring ‘Open’ Banking vendor Finicity in the US and is rolling out solutions globally.

Visa tried and failed to buy Plaid for $5.4 billion, so instead acquired Tink in Europe.

Side note: Plaid seems to have “won” Open Banking and is now worth circa $15 billion. But this is no zero-sum game.

Locally, Cuscal, NextGen, and Fat Zebra have all made Open Banking acquisitions.

Other payments companies are also sniffing around looking for a deal. Or so I’m told.

What Will The Next 12 Months Bring?

It’s notoriously hard to follow up your breakout movie with another blockbuster hit (unless, of course, you’re Paul Hogan delivering Crocodile Dundee 2 hot on the heels of Crocodile Dundee).

But I see this pattern continuing to grow: more consumer lenders, especially ASX-listed ones, making the move to Open Banking. Boards are demanding squeaky-clean compliance and rigour around data usage and management.

Non-bank lenders will join the party too. Those that get on the front foot and look into Data Recipient solutions before their Data Holder obligations will absolutely not regret doing so (in the not-so-humble opinion of your humble scribe).

My red-hot tip (that might be a little out of left field) is that a few banks, especially smaller ones, will adopt an all-of-bank approach to Open Banking. They will use it to generate significant competitive advantage by delivering use cases (dang, I hate that term in this context, but it’s all I have right now).

Some of these banks have “previous” when it comes to Open Banking but possibly “went too early.” They have the battle scars but also see the bigger picture.

Open Banking is about customers, choice, convenience, and confidence. The ecosystem players who put these as their North Star will extract the most value and ensure their Open Banking sojourn isn’t a proverbial one-hit wonder.

Conclusion

In conclusion, the landscape of Open Banking is transforming. With the right tools and strategies, non-bank lenders can navigate these changes effortlessly. Our compliance tool magically adapts with each new standard update, ensuring your data is 100% compliant, 24/7. We automatically solve your open banking compliance problems instantly, with the flick of a wand.

As we move closer to the July 16th, 2026 deadline, it’s essential to stay ahead of the curve. Embrace the magic of Open Banking and watch your opportunities unfold. Your wish is our command.