Commonwealth Bank has received accreditation to operate as an approved data recipient under the Consumer Data Right, making it the first bank to be a data holder and an ADR in the open banking system.
Other recently accredited ADRs include Adatree, a provider of CDR services; Ezidox, a fintech specialising in document collection and management; and Yodlee, a data aggregation and analytics company.
They join Frollo, Intuit, Regional Australia Bank and Credit Simple, which have been in the system for a while.
Consumers have the right to direct their bank to share their data with an accredited data recipient.
CBA’s move is a surprise, given that open banking is seen more as a threat to big banks than an opportunity.
However, CBA chief executive Matt Comyn said there was plenty of opportunity for big banks as well.
Speaking at a recent briefing, Comyn said: “Open banking will allow us to aggregate a customer’s financial data. The more data you have the more meaningful the insights you can give the customer.”
He said that bank was developing new retail services and partnering with external providers whose products would be integrated into the CommBank app. Under CDR the app could become a hub for a range of connected services.
Comyn’s thinking is in line with the approach to open banking being adopted by large financial services groups overseas.
A recent survey of 300 global banking executives commissioned by banking software company Temenos, and conducted by the Economist Intelligence Unit, reported that open banking initiatives were cited by 29 per cent of respondents as a high priority – the second highest priority listed.
Temenos chief strategy officer, Kanika Hope, said: “The pandemic boosted open banking and the financial technology ecosystem.
“The report finds that open banking could benefit banks by making it easier for them to leverage their own data internally for better service personalisation. Banks could be the biggest beneficiaries, provided they adopt adequate technology strategies to compete with nimble new entrants.”
Hope said part of the thinking behind the development of open banking was that large banks have too much market power. As such, it was seen as a threat to large financial institutions.
“What we are seeing is that new entrants into banking can use the data provided by open banking to cherry pick market segments.
“But the aggregation of banking services, convenience in payments, more transparency around rates and terms and the provision of real tie account data that open banking facilitates provides opportunities for big banks too. What the survey shows is that they are starting to act on that opportunity.”
Open banking strategies that respondents pointed to include establishing open banking hubs, which would give customers the ability to connect their data to third party providers, greater personalisation of services, and using open banking to more efficiently meet compliance requirements.
Australia’s open banking system continues to evolve. Last month, ADIs expanded the range of data available to accredited data recipients.
The range of data available to ADRs will expand again in July and in February next year.