We’ve heard many times before data is the most valuable thing organisations can obtain, and consumers can giveaway. As a result, the Australian Banking Association (ABA) introduced the Consumer Data Right (CDR) regime in July 2020 to give consumers greater control over their data. Reviewing the regime four years later, ABA commissioned Accenture to unveil how Australians are using it.
The CDR was rolled out in stages: initially to customers of major banks in 2020, then to customers of other banks in 2021. Since then, Accenture found that at the end of 2023, only 0.31 per cent of bank customers were using CDR. Additionally, more than 50 per cent of data-sharing arrangements had been discontinued or allowed to lapse throughout the year.
The banking industry has invested around $1.5billion into consumer data rights since 2018, with significant government support on top of this. However, contrary to its intent, the CDR is negatively impacting competition in the sector as mid-tier and regional banks incur disproportionately higher compliance costs compared to major banks.
ABA CEO, Anna Bligh said the banking industry has worked in partnership with government to roll-out CDR and has dedicated considerable resources into building data sharing systems.
“Australian banks have invested heavily to secure the success of CDR,” Bligh said. “Despite the best efforts of government, regulators and industry, this review makes it clear that CDR has not realised its potential.
“Australians have enthusiastically embraced digital innovations in banking such as mobile wallets and PayID, however uptake of the CDR has been comparatively low. It’s time to go back to the drawing board. The current CDR regime isn’t delivering for customers or enhancing competition and a new pathway forward is needed.”
Harder to compete
High compliance costs are forcing difficult investment trade-offs – particularly for smaller banks – leading to vital technology and customer projects being deprioritised (e.g digital banking experiences, scam detection and prevention).
Customer Owned Banking Association (COBA) CEO Michael Lawrence said customer-owned banks had collectively invested over $100million in CDR, with very little benefit to customers or competition.
“While we support the intent of the CDR to increase competition, it has actually made it more difficult for smaller banks to compete by tying up resources with little to no tangible return,” Lawrence said.
“Before smaller banks commit more resources, we ask for a clear roadmap to ensure the CDR delivers on its original intent to improve competition. Forging ahead without addressing these foundational issues will further erode competition and divert essential investment away from improving customer outcomes and supporting local communities.”
Other digital innovations in banking, such as mobile wallets and PayID, have had materially higher customer uptake three to four years post launching.
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