Van Le, Director of Innovation and Strategy at Xinja, was a guest at ASIC's Annual Forum in March 2018. She made time to join us on our podcast to discuss open banking.
You can read the full transcript of the interview below.
Host: Hello and welcome to the official podcast of the Australian Securities and Investments Commission. With me today to discuss open banking is Van Le, director of innovation and strategy at Xinja. Van, welcome.
Van Le: Thanks very much for having us.
Host: So to start us off, can you tell me a little about what open banking is and how it’s going to change banking as we know it?
Van Le: I think one of the most exciting opportunities with open banking is that it will enable customers to safely and securely share data about their finances in their banking, which will enable service providers to provide much better choice and transparency so that people can make much better decisions, much more informed and transparent decisions, around what’s best for them.
Host: So this is sort of about competition and consumer choice, would you say?
Van: Absolutely, in a way that empowers consumers more than ever before because the options and choices available to them can now be provided in the context of genuine data and more complete data around what those options mean for someone’s financial future.
Host: And you can tell me a little bit about how Xinja fits in to this idea and what your vision for banking in the future in Australia is?
Van: Absolutely. What we’re really interested in doing is creating a banking service that helps people make better choices with their money and key to that is being able to provide the information that customers need in real time – information that provides a complete picture of where someone’s financial situation is and information that’s put in context of what matters to people and what they really care about so that it takes away the stress and the overwhelm of making those financial decisions.
Host: So there’ll be a lot of, I would think, social and demographic components that fit in to this concept, what about issues with people who don’t have such good access to the Internet, what about people who are less financially savvy, what about elderly people, people with disabilities, people who live in rural areas – how are you planning to address the demographic impacts?
Van: A common theme in terms of what we’re looking to do at Xinja is bringing humanity back to banking, and part of that is making it possible for anyone, everyone, to access the kinds of services that you used to be able to get when you had a bank manager available down the street – someone who knew your character, someone who knew your finances and someone who could talk you through what’s best for you and what your options are. We think for many customers technology provides us the opportunity to bring even more humanity to those decisions and provide more transparency and fairness, and we also recognize that there are a number of customers who don’t have similar levels of access to technology and digital channels. That’s why for us when we say that we believe people should be able to do all their banking from their mobile phone, it’s not limited to apps, it also means you can still call someone and interact with another human being to be taken through what those options and opportunities are.
Host: Obviously with the kind of setup that you’re talking about, privacy and information security will be a really strong focus for you. Can you tell me a little bit about how you’re going to approach that?
Van: Yes, absolutely. It begins with bringing the best that technology has to offer in terms of protecting the data that we do have. Part of that is about managing that balance between giving consumers access and control over their data and providing the freedom to share that without exposing customers to unnecessary risk. So for example, we don’t expect that customers should have to hand over their online and mobile banking details in order to share data about their transactions. We’ve learnt a lot from neo-banks overseas, especially in Europe and the UK in terms of the challenges and also the opportunities of the PSD2 standards over there and what that might bring to open banking and the levels of security that would be appropriate for the kinds of services that we’re looking to offer. Above and beyond that I think it would be quite arrogant for any of us in the industry to say that there will never be a data or security or privacy breach - if anything, that we should be preparing for these things to happen because cyber security and cyber crimes are getting more and more advanced. But what’s important is that we’re aware of those risks and that we have policies and processes and technology in place to minimize the impact of those instances so that customers’ money is protected even if they do occur.
Host: What about trust? I would think that trust would be a very significant component of the customer relationship, really for any financial institution but especially for someone that’s new?
Van: Absolutely. You see numerous of stories in the media recently on the erosion of trust and the need for the industry to rebuild that trust again. In very early customer workshops and interviews one of the questions we asked them is ‘who do they trust with their money?’ And what was interesting was some of them said ‘Who I don’t trust are fund managers, superannuation funds, my bank, my husband, my 18 year-old self…’ and when we asked them who they do trust they said myself, my wife, my Mum, a term deposit. So what’s interesting there is not so much the lack of desire for trust but the demand for a different level of conduct and behaviour than what we’re seeing in the industry today.
Host: And what about risk? What would you say are the biggest risks for consumers in this space? And I guess there’s probably also different risks from your angle, but we’ll start with consumer risks.
Van: Separate from the technology and cyber security risks that ideally financial institutions should be taking care of, it’s also important that consumers look at risks in a similar way to how they manage their Facebook accounts. So anywhere where you’re given the opportunity to share your data, you want to make sure that you know what you’re consenting to, who’s going to get access to that data, how they would use that and how to change or withdraw that consent in the event that you change your mind. So while this opens up a whole new world of opportunity, we’ve seen what’s happened with some people with their Facebook accounts and would hate to see similar circumstances arise in the context of open banking, especially now that we know more and know what’s available to us to be able to educate consumers on how to make the most of this opportunity without putting themselves at unnecessary risk.
Host: And so what about the risks from your perspective? What about the business risk? What do you think are the key challenges that you’re looking at there?
Van: When we started on this journey to create a neo-bank from scratch, one of the visions we had in mind was a world where there would be open banking and more fluid and accessible data sharing so that customers could make better choices. So in some ways we’ve been designing our services to prepare for this world. And the challenge that means for us I think actually is: how do we make it easier for new technology to speak to perhaps legacy systems and still facilitate this kind of data transfer no matter what kind of technology that you’re working with.
Host: So do you think the big banks are ready for open banking?
Van: I wish I was a big bank so that I could tell you, I do think they have strongly recognized the desire from customers to be able to share data and quite rightly, they’re looking at ways to do that without exposing customers to unnecessary risk.
Host: Thanks very much for your time today, Van.
Van: Thanks very much for having us.
Tessa: And we’ll be back with another episode of the ASIC podcast very shortly.