Consumer Data Right for banking goes live

Australia’s ‘big four’ banks have today gone live with the first phase of the national open banking scheme known as consumer data right (CDR), giving customers greater control over their own data.

Individual customers of the big four can now request their bank share their data for deposit and transaction accounts, as well as credit and debit cards, to other banks and fintechs accredited by the Australian Competition and Consumer Commission (ACCC).

While there are only two accredited data recipients at the time of launch, the ACCC said a further 39 providers have already started the process to become accredited and securely receive customer data.

Data from home loans, personal loans, investment loans and joint accounts will be added to the scheme from November 1.

Legislation mandating the introduction of the CDR cleared the Senate in August last year.

It following a concerted effort by the Productivity Commission and the ACCC to exert pressure on the banking, telecommunications and utilities sectors by letting customers more easily port their information between suppliers in order to access better deals.

“The Consumer Data Right gives consumers control over information banks already collect about them,” ACCC commissioner Sarah Court said in a statement.

“Importantly, from today, it allows consumers to share that data with other businesses, such as fintechs, that may be able to provide them more personalised services and competitive offers.”

The launch of the scheme was largely welcomed by banks, and was described by Australian Banking Association chief executive Anna Bligh as a “watershed moment for competition in the banking industry”.

“This is a great achievement by the major banks. Despite moving the majority of their workforce to work from home and processing unprecedented numbers of customer queries and loan deferrals as a result of COVID-19, the banks have stayed on plan and delivered open banking and ensured the data will start to be shared from today,” she added.

Rachel Slade, personal banking group executive at NAB, said that CDR is about more than just smooth data transfers.

“We’ve invested heavily in our technology foundations and in our people to build a great customer experience that has been focused on ensuring the safety and security of customer information,” Slade said.

NAB has been working with Amazon Web Services (AWS) to develop a secure open banking API for customers to transfer data between institutions, AWS A/NZ commercial sector managing director Adam Beavis said.

AWS also worked with Frollo, one of the two fintechs accredited at the launch of CDR, Beavis added.

However, Slade added that “it will take time for customers to develop familiarity, trust and understanding in using open banking”.

“We’re continuing to prepare for future phases that will allow our customers to share more of their data, should they choose to do so," she said.

“We will continue to invest in the open banking regime as future phases are developed and new customer experiences are released, while ensuring that speed is not prioritised over safety.”

CBA similarly highlighted the increased security of data transfers using open banking.

“The investment in open banking will allow a well regulated and secure framework for the sharing of customer data in Australia and a substantial improvement over other, unsafe practices,” CBA’s group executive of retail banking services Angus Sullivan said, echoing calls from the bank’s CEO Matt Comyn to scrap the controversial practice of screen scraping used by a number of fintechs.

Westpac’s acting CEO, Richard Burton said the increased security and transparency would also enhance consumer confidence.

“We have been working hard throughout the entire process to ensure the system is robust and secure for customers,” he said.

“Enhanced data sharing will give customers more confidence they are getting the best deal, and help make it easier to find the best value service that meets their needs.”