Australian federal treasurer Scott Morrison has announced an independent review into open banking to advise the government on the best way to open up financial data to consumers.

Morrison said in a statement that open banking aims to provide Australians “greater access to their own banking data” and has the potential to transform the way people interact with financial institutions.

King & Wood Mallesons partner Scott Farrell has been appointed to lead the review, which is due to report back by the end of the year.

“Mr Farrell has given many years of service to the public and private sector in advising on, and guiding, regulatory and legal change in the financial sector,” said Morrison.

“He has intimate knowledge of the financial technology (fintech) sector and is a member of the government’s FinTech Advisory Group.”

Fintech startups have been waiting for an open banking regime to start in Australia so that customers can more easily switch away from the traditional big banks, as a result of their data having the freedom to flow to the provider of their choice.

Morrison himself said that such a scheme would “mean more choice and cheaper and better options for consumers”. At the federal budget in May, he set a goal to get a system up and running next year.

The review will take in advice from the private sector, including banking, consumer advocacy and fintech representatives to develop its final recommendations.

FinTech Australia chief executive Danielle Szetho welcomed the appointment of Farrell to lead the review.

“We believe Scott will bring a pragmatic, forward thinking and balanced approach to the process, with a firm eye toward the consumer outcomes the inquiry seeks to realise.”

The big banks have in the past been less enthusiastic than fintechs to adopt open banking, citing security and privacy concerns.

But Tony Pearson, executive director at industry body Australian Bankers’ Association said the banks welcomed the open regime “provided that customer security and privacy needs are paramount”.

“This inquiry is a crucial step to identify and resolve the legal and technical challenges in open banking.”

Pearson said that in principle the banks supported open banking, but it was important to get the design right.

“It will take a shared effort between banks, governments and fintechs to address issues like ensuring customer privacy is protected, their data is secure and knowing what to do when something goes wrong.”

Szetho said FinTech Australia was pleased to see the Australian Bankers’ Association support for the enquiry.

“This public statement of support is important, given that in the past individual banks have been extremely resistant to allowing customers to access their data,” she said.

“The open financial data revolution is already underway in Australia. Fintech firms are helping customers realise the power of their data through new solutions in areas such as personal budgeting, micro-savings, payments and lending.”

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