Hong Kong is set to be one of the first countries to fully embrace Open Banking. A survey by Accenture found that the concept is much more appealing to those in the autonomous region than it is to some of the major Western countries that have tried to introduce it.
There have been talks about Australia participating in Open Banking over the last couple of years, but the country is unable to get the idea off the ground due to concerned citizens not wanting to hand over their financial data to third parties.
While Open Banking has had support in response to the Royal Commission inquiry, which revealed that Australian banks were handing out loans that were not in keeping with an individual’s incomings and outgoings, it has not yet progressed forward. The idea of data ownership is still a relatively new and sensitive concept in many countries. The UK is in a similar state of flux at present.
However, Hong Kong has no such issues, which means that its smart banking proposals will begin this month.
This has been in the works since last July, when the Hong Kong Monetary Authority (HKMA) released its Open API framework, allowing users to share their banking habits with third parties who then passed recommendations back to the banks.
The key to getting residents of Hong Kong to accept Open Banking is that if banks can see that consumers have strong budgeting skills and manage their outgoings effectively, then they will be more likely to gain access to higher deposits and more favorable loan rates.
This will also enable the beginning of a so-called smart banking revolution, which should be a major feature over the next couple of decades as virtual banking licenses for neobanks and faster payment mechanisms become more prevalent.
Part of the reason for other countries not adopting Open Banking is likely to come down to trust. After the inquiry in Australia revealed so many examples of misconduct and negligence as well as a culture of prioritizing sales over customer welfare, it is hard to imagine citizens wanting to comply with such data requests anytime soon.
Although the idea could help to fix some of the existing problems within banking networks and reduce loans that are not suited to the end need, it seems likely that Australian banks will have to do a lot more to repair trust and improve perceptions of their reliability before they can go in a new direction.
When Accenture carried out its work in Hong Kong, it also used the same methodology in both Australia and the UK to try and paint a clearer picture of consumer interests.
While over half of those in Hong Kong would readily hand over banking data to receive better and more personalized loans, 66% of those surveyed in Australia would not. The figure is slightly higher in the UK at 69%.
This indicates a wide gap in culture and reception of how banks have behaved in the past. Just 31% of Hong Kong respondents said that they would not support Open Banking in its current form.
Fergus Gordon, Managing Director at Accenture, said that Hong Kong will have the opportunity to ‘leapfrog many markets with Open Banking solutions.’