The Minister for Financial Services Stephen Jones told delegates at a payments industry conference this week that they need to get their marketing teams to work thinking up a new name for the Consumer Data Right, which he felt was not a clear descriptor of what the CDR was about.
What Jones was really saying, whether he intended to or not, was that there is very little consumer awareness of the CDR and the services it is capable of delivering. What is more, it is seen as another regulatory burden by many of the financial institutions that are involved in its first iteration, open banking, and not the opportunity it is meant to be.
For a system that is supposed to revolutionise the way consumers use their personal data to gain access to more competitive services, CDR is getting off to a slow start. It was the year’s biggest non-event.
An Ernst & Young report on CDR released during the year said many banks have adopted a compliance attitude to open banking and have not given much consideration to the competitive advantages the system might offer.
The ACCC’s performance reports showed that a number of banks struggled to meet service availability requirements.
In October, after two years of operation, the Statutory Review of the Consumer Data Right, conducted by retired senior public servant Elizabeth Kelly, recommended that improvements to CDR functionality and data quality should be the government’s priority, ahead of rolling the system out to other industry sectors.
Kelly cited one submission that said many participants regularly shared concerns about poor quality CDR data, delays in data being received and “missing fields, erroneous data fields, garbled and inconsistent data.”
The review said: “It will take a concerted effort by all participants in the CDR ecosystem to work collectively to resolve data quality issues as they arise.”
“Accredited data recipients report feeling that the onus is on them to resolve issues related to the quality of data that have received from data holders, with little action taken by the data holders themselves.
Kelly also said there was a perception accredited data recipients that there is limited enforcement by the Australian Competition and Consumer Commission.
These findings were echoed in a report by leading open banking participant Frollo, a month later. Frollo said data transfer is generally fast and reliable, with the average data holder providing data in under a second, with 98 per cent reliability.
But when Frollo analysed “data holder API payloads” for transaction and mortgage accounts it found there are gaps.
“These gaps are especially visible when it comes to mortgages, where information about minimum repayment, original loan amount and maximum redraw amounts isn’t reliably provided by banks,” the report said.
It said use cases are “quite limited” from a home loan perspective. It also found gaps in transaction data, including merchant category codes and biller codes.
Frollo chief executive Tony Thrassis said: “As the government begins the rollout of the CDR into the energy sector, the growing open banking ecosystem must remain supported by focusing on improving data quality and enforcing data holder standards for consumer experience and reliability.”
An accompanying consumer survey found that people think open banking could be useful in allowing them to get a complete financial overview from one service provider and for streamlining loan application processes.
However, Frollo said consumer awareness is low and it called on the on the government to do more to raise consumer awareness of the Consumer Data Right and open banking.
If there was any doubt that CDR was struggling to get off the ground, the failure of the UK open banking company TrueLayer to establish a business here made the position clear.
In October, TrueLayer closed its Australian office, a little over 12 months after it launched here.
The move to shut up shop has been driven by problems in the parent company operation, which announced cost cuts in September, and by the slow progress in the development of the CDR locally. The company still holds an ADR licence and will review local market conditions down the track.
The government is committed to CDR and Jones said initiatives in the pipeline for next year will improve its scope and functionality. These include extending CDR to other industries, including non-bank financial institutions, and introducing action initiation.
Action initiation through CDR allows a consumer to consent to an “accredited action initiator” initiating actions beyond requests for data sharing. This could involve third parties switching accounts or products, making payments or updating contact details across multiple accounts on a consumer’s behalf.
The addition of action initiation to the CDR was the key recommendation of the Inquiry into Future Directions for the Consumer Data Right, which was headed by lawyer Scott Farrell and reported last October.
And it has been at the top of the wish list of industry participants since CDR was launched. Many feel it will be a game changer. The system needs something.