How open banking will help automate budgeting

- By Collaborative Media & Publishing
Budgeting is traditionally considered boring, but Australia’s new open banking regime promises to make people more interested – even if they don’t know it.

In this new world, empowered consumers will be able to let third parties analyse their personal data – wherever it's held – and nudge them towards the best service.

The new legislation is still being rolled out but it will help counter the rise of seamless 'invisible' payments, which threaten to derail the financial wellbeing of younger Australians.

The dangers of invisible money

Seamless 'invisible' payments integrated into ride sharing and food delivery apps are bringing consumers convenience but costing them thousands of dollars a year.

Ubank interviewed 250 Australians (aged 18 - 35) and found the average person spends $120 a month on ride-sharing services and $144 on food delivery services[1]. But the price is often control.

“Budgeting tools out there today don’t have the full data set,” says Keith Brown, BPAY General Manager Product, Scheme and Business Development.

"It's not just about the payment, it's about information related to the payment, and if I've got multiple sources of information and multiple bank accounts, how do I make the best decisions about those payments?" adds Brown.

Average number of products (by demographic)

Source: Deloitte. Open banking: switch or stick report. October 2019.

The ever-increasing intangibility of money can have dire consequences on bank accounts. This is not a new phenomenon.

A growing body of research shows how new forms of money have changed our spending habits.

For example, a 2001 MIT study[2] found people’s willingness to pay can be increased when customers are instructed to use a credit card rather than cash.

Today, it's even easier to spend money given consumers don't even have to hold a physical card.

Shifting the balance back

The rollout of open banking, part of the Consumer Data Right (CDR) legislation, will be completed by 2022[3].

It will give ACCC-accredited third parties access to consumers’ banking data (read access), such as a person’s transaction history or account balances, and eventually the ability to make decisions (write access). Eventually other sectors will become part of the regime.

"It's going to take a while for people to see the real benefits out of it. It's not just about the bank data, it's actually about the information businesses provide – utilities, telcos and other areas – that's a much richer data set," Brown says.

This data can unlock the information needed so people can make more informed decisions about payments while managing multiple accounts. These benefits have already been seen internationally.

UK-based bank NatWest trialed personal finance app Mimo (“money in, money out”) in April 2019[4]. It drew on open banking APIs, AI, and data analytics to provide users with budgeting help, financial task reminders, and insight into their spending habits. The app could tell users when to switch energy providers or if they're spending too much on coffee.

Switching providers in seconds

When it comes to financial services, most people want products with low fees and strong returns that suit their circumstances.

Deloitte's 'Open banking: switch or stick?' report found that Millennials and Gen X are actively engaged with their finances, such as managing their budgeting and spending, and are most likely to switch providers.

But the cumbersome process of providing authentication documents coupled with a myriad of confusing variables that can determine the best deal puts people off switching regularly.

However, since data is shared between financial institutions via open banking, switching between providers can be achieved in a few clicks of a button.

“I think the future will be that banks will enable the ability to initiate a payment from outside of the bank,” Brown says.

“The BPAY scheme will remain an important enabler of payments in this world, with a range of FinTechs already integrating BPAY into their platforms,” adds Brown.

Meanwhile, the ability to switch to the best provider according to their specific needs will inevitably increase the quality of banking products as the landscape becomes more competitive.
[1] ubank. (2021, February 23). The cost of being a millennial | Spending & Saving - UBank. Retrieved from
[2] Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay. Retrieved from
[3] CDR legislation. (2021, February 11). Retrieved from
[4] NatWest to trial new personal finance app. (2021, February 23). Retrieved from

Published by BPAY Pty Ltd (ABN 69 079 137 518) email: The BPAY Scheme is managed by BPAY Pty Limited.  When you use BPAY payment products, the BPAY Scheme is paid fees relating to processing costs and BPAY Scheme membership.  Contact your financial institution to see if it offers BPAY payment products and to get the Product Disclosure Statement.  Any financial product advice provided by BPAY Pty Limited in relation to BPAY payment products is general advice only and has been prepared without taking into account your objectives, financial situation or needs.  Before acting on such advice, you should review the Product Disclosure Statement and consider whether BPAY payment products are appropriate for your personal circumstances.

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