"Giant Connector Plug" Companies to Fill Open Banking Holes

The advent of Open Banking in Australia in July this year, when the four largest banks will make their data available to accredited third parties, has created a significant opportunity for new companies to bridge the digital gap between consumer and corporates.

A leading example is Australian company Verifier. It sees its role as a “giant connector plug” for the economy.

The company’s chief executive and founder Lisa Schutz explained that plugging consumers and corporates into the data-driven world would be a significant driver of productivity and efficiency, but only if we got the privacy and permissions framework right.

"We were working on shareholder value in banking, and I saw that from the CEO's perspective the strategy was all about cash flow, and yet the micro decision making programs at the bank were all about credit risk," said Schutz, who labeled this gap as a "brain and body" disconnect.

“The C suite were thinking about what they were going to buy or how they were going to restructure, but never fully realized that their machines in areas like credit risk were actually making the decisions for them. There was a disconnect between the way the businesses were being run and the automated functions of the business, and people were working to KPI’s which weren’t necessarily in line with the business.”

The idea for the company which became Verifier came from Schutz's passion for helping businesses fix the "brain and body" disconnect she had observed as a consultant.

The Use Case

Lisa Schutz gives an example of how Verifier, as an accredited data user under Open Banking, can do to contribute to better outcomes.

Australian legislation requires lenders to check the income of people and businesses who apply to them for credit, and in many cases this currently means that consumers take several days to collect the documents, in paper form, to do this.

It significantly elongates the process between application and decision and also creates dropouts of up to 30 percent on some loans.

Through Verifier, a person can upload all their relevant personal data and give permission to make this data available to multiple lenders. They can maintain their profile over a period of time, or they can choose to delete all data once it has been accessed for a one-off purpose.

The Roadmap

In time, Australia plans to extend the Open Data regime to the utility and telecoms sector, and the combination of this with banking data extends the opportunity and would put Australia ahead of many other economies, creating new opportunities for data portability.

"This will give us a roadmap for data sharing beyond banking, and that could mean that Australia could really leapfrog in this area, and start to reap the benefits across the economy," said Schutz.

One example could be rental applications, for which credit data and utility portability could fast track processing.

"And that is what I think is relevant and timely about Verifier. We are helping to rewire the economy in a data sense," said Schutz.

Not only will this drive greater efficiency but it could also be a factor in creating personalized marketing and better offers for consumers based on their profiles.

“If you think about the amount of waste that goes into misdirected services, there will be quantum benefits to the community from efficiency,” said Schutz.

"Because of this, corporates [will have the ability] to offer better deals to people who can help get waste out of the process, and get things done quicker and with less hassle. Going forward, if I am able to get a more streamlined onboarding process, then I should be able to get more competitive quotes."

Battling Perceptions

One issue yet to be determined is data standardization, but while Schutz saw standardization as helpful, she believed it was not essential for the project to begin.

“I do think that what derails this stuff is the perception that we can’t proceed until we have a standard,” she said. “We see a lot of opportunities for first movers to help to set the new standards and deliver the digital relevance.”

Schutz noted that corporates have a choice with their data stance: they could take a back seat and wait to be told to do something, or they could move ahead and be an early developer of APIs “and doing something really cool with it.”

“I think the big risk is sitting and waiting for it to happen to you,” she said. “My prediction is that the changes from open data will move along slowly for three years or so, and then it will go exponential.”