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Following the success of the Consumer Data Right in the banking sector, Australia’s government has confirmed that it is now aiming to take on open finance.
Almost as soon as open banking emerged, so did chatter about open finance.
In the EU, for example, there has been commitment to open finance legislation before the end of the Von Der Leyen presidency in 2024, while the UK’s Financial Conduct Authority consulted on the matter last year.
Now, in Australia, Scott Morrison’s government has said that “‘Open Finance’ has been identified as the next priority area to grow the CDR [Consumer Data Right]” in a report released on January 24.
The government said that CDR has the potential to become the “central nervous system” of Australia’s data economy. The report also recommended that the CDR take a “holistic approach” going forward, with stakeholders suggesting that unlocking public sector data could drive private innovation and improve how consumers use government data services.
Flexibility and the need to maintain consumer rights and protections are also noted in the report, which suggests that the CDR must be responsive to changes in the digital and data frontier that are not always predictable or stable, while also ensuring that it is able to engage with a large segment of consumers as new sectors become part of the framework.
The CDR also has the potential to play a role in Australia’s digital identity plans, the report suggests, with identity verification, through both government data and private sector solutions, a proposal made consistently by stakeholders during the Strategic Assessment that Australia’s government undertook to help comprise the CDR report.
CDR so far
The Australian government introduced the CDR legislation in November 2017. It is intended to give consumers greater access to and control over their data, while improving consumers’ ability to compare and switch between products and services.
Like the revised Payment Services Directive (PSD2) in the European Union, the CDR aims to encourage competition between service providers, deliver cheaper prices for users, and foster new innovative products and services. However, right from the start, CDR had a scope beyond just payments, including areas such as utilities services.
Since the introduction of the CDR to the banking sector in July 2020, the number of what the CDR refers to as accredited data recipients (ADRs) has been steadily growing.
An accredited data recipient is a business that has been accredited by the Australian Competition and Consumer Commission (ACCC) to receive consumer data from a data holder once consent has been given. The accredited data recipient then uses the data for the purpose requested.
Currently, there are 26 ADRs, 11 of which are active, according to the report.
“Open Finance will allow consumers to compare and save across a greater range of financial products covering not only banking but also general insurance, superannuation, merchant acquiring and non-bank lending service providers,” said Senator Jane Hume, the financial services minister, in a statement.
According to Australia’s Treasury department, introducing data from these sectors will build on the momentum of open banking, with consumers benefitting from greater control over every part of their financial lives, including their savings, loans, assets, superannuation, and financial planning.
The government has confirmed that it will consider where complementary government-held datasets can be brought into the CDR ecosystem to support open finance.
The CDR’s integration of these sectors will be undertaken in a staged process, the Treasury has said, with the assessment and designation of key datasets within the superannuation, general insurance sectors and merchant acquiring and non-bank lending service providers beginning this year.
