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‘Democratising’ data: Assistant Treasurer celebrates non-majors’ CDR anniversary

The federal minister for financial services has praised the inclusion of non-major banks in open banking one year since it came into effect.

Since 1 July 2021, open banking has been open for non-major banks, allowing them to share data within the consumer data right (CDR) initiative launched one year earlier.  

Speaking of this step to include non-majors in CDR, Assistant Treasurer and federal MP for financial services Stephen Jones commemorated the milestone by noting his longstanding support for CDR and its benefit for the Australian public. 

“Quite simply, I see the CDR as democratising customers’ access to their banking data so they can derive value from it and breaking down the barriers that previously stopped them from getting the best possible deals,” Mr Jones said in a statement. 

“To date, Australia has an incredibly concentrated financial system. Reforms that give consumer greater powers, such as the CDR, offer a chance to shift that equation.”

Mr Jones added that he’s witnessed CDR drive change “in the way businesses regard data” and that consumers will be the “beneficiaries of new and more competitive data-driven products and services”.

“Perhaps above all else, the CDR will contribute to Australians becoming more financially capable,” Mr Jones said. 

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“That, in turn, will help empower individuals, families and businesses to build and manage their own finances by shifting the balance of power from the businesses who accumulate and hold our data to the consumers whose actions generate it.

“With its focus on consumer rights, the CDR is an important economic reform. Micro-economic reform that levels the competitive playing field and creates strong consumer rights can only enhance the productivity of the economy.”

Open banking as a whole not without flaws

But while this anniversary of open banking, and CDR at large, has been a point of celebration for some, others have taken the date as an opportunity to magnify issues with the regime. 

In a public release, the fintech Frollo highlighted that, despite the potential of open banking alongside its positives such as transparency and security, the initiative still has a number of glaring faults. 

“Regardless of our excitement about the future, it’s clear that open banking isn’t where we’d hoped it would be today. There are data issues, the user experience isn’t always great, and after two years, Frollo is still the only one doing open banking at any scale in Australia,” the fintech said, noting that 31 businesses are currently registered to use open banking data,” it said. 

Such issues magnified by Frollo include how non-bank lenders “aren’t yet required to share their data”, how BNPL and payday loans are currently not included in the scheme, and a complicated user experience. 

“Sharing data from a joint account is complicated, and sharing data from a business account sometimes requires customers to print a document and take it to a branch. So much for digitalisation,” it said.

“Some issues like joint account sharing will be fixed this year, and others must be investigated. Then there are some improvements, like using your banking app to provide data sharing consent seamlessly, that aren’t even on the roadmap yet.” 

Frollo added that the ACCC, Treasury, Data Standards Board, banks, and businesses are “working hard to improve open data capability in Australia”, subsequently resulting in many “aspects of the ecosystem” coming under scrutiny. 

“For example, the consent process is an area for reducing friction, and the new ‘tiered accreditation’ models will need to be monitored to see if they’re effective or need refinement,” it said.

However, this is not the first time that the roll out of CDR has been criticised for its flaws. 

Earlier this year, founder and chief executive of the fintech SISS Data Services, Grant Augustin, criticised open banking for its “prohibitive costs” for the fintech sector and its slow roll-out.

You can find out more about open banking and what CDR means for mortgages and mortgage brokers in the most recent episode of the Mortgage Business Spotlight episode.

NextGen’s head of broker partnerships, Renee Blethyn, unpacks and demystifies the open banking and consumer data right and what that the benefits the regime provides to borrowers, brokers and lenders; how the “trusted adviser” rules work in practice; and what’s next for open banking in Australia, here:  

[Related: ‘Open Finance’ named as next CDR priority]

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