Only 0.31 percent of bank customers using CDR: ABA

The Australian Banking Association (ABA) has found at the end of 2023, only 0.31 percent of bank customers took advantage of the consumer data right (CDR).

According to the ABA’s latest review, more than 50 percent of data sharing arrangements have been discontinued or allowed to lapse throughout the year.

The trade association for the Australian banking industry commissioned Accenture to investigate how it’s been utilised and the rollout, releasing findings on Wednesday [pdf].

The CDR is an economy-wide reform, rolled out sector by sector, meant to enable consumers and organisations to find value from their collected data and offer greater control.

The regime went live across major banks in July 2020 followed by smaller banks a year later and has since begun rolling out to the energy sector.

However, part of the ABA’s findings included that the CDR is unintentionally “negatively impacting competition in the finance sector as mid-tier and regional banks incur disproportionately higher compliance costs compared to major banks.”

In 2021, ITnews found there were technical challenges for smaller scale banks regarding implementing the complex open banking scheme, identified as key challenges, alongside resourcing capacities. 

The industry has attempted to rectify similar issues such as the Australian Competition and Consumer Commission (ACCC) bringing in a CDR portal aimed at directing stakeholders through the technical requirements.

The ABA report also found alongside government investment, the banking industry alone has invested $1.5 billion into the CDR since 2018.

Further findings include high compliance costs forcing tough investment trade-offs and other digital banking features such as mobile wallets and PayID, showing better customer uptake over the last two to three years.  

ABA CEO Anna 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,” Bligh said.  

Customer Owned Banking Association (COBA) CEO Michael Lawrence that, “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.”

According to Lawrence, customer-owned banks have invested over $100 million in CDR in total, with very little benefit to customers or competition.   

“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,” Lawrence said.

Other perspectives

FinTech Australia CEO, Rehan D'Almeida said, “Historically, the fintech industry has had an excellent working relationship with the banking sector and continues to partner closely with all banks on many key initiatives, including the CDR.

D'Almeida said the ABA “did not share their view with us ahead of a broader release” but is “open to discussing their perspective.”

“As we debate the relevance of the CDR, it's worth refocusing on why it was commissioned and recommended by the Treasury in the first place.

“This is first and foremost a cost-of-living initiative, aimed at improving competition, driving down prices, and enhancing financial decision-making — at a time when it's needed most.”

D'Almeida said this was “vindicated” earlier this year by a bank-commissioned report from Deloitte back in March 2024 which revealed “the Australian economy would be $16.7 billion larger by 2043 if the data right expanded into retail, healthcare, and other personal and professional services. ‘

“It would also create 50,000 additional jobs sparked by greater competition and new apps built on cross-sector data sharing,” D'Almeida said.

“The figure prominently used in the ABA's report, 0.3 percent adoption, speaks to the number of ongoing active CDR users.

“These are people who are actively connected to the CDR via their bank account and leverage it on an ongoing basis.

‘Due to an enduring policy debate, use cases for the CDR are currently primarily in fields such as lending — mortgage brokers accessing data to help assess loans. This only requires single-use access, which is a different metric,” D'Almeida said.

He added the Australian Competition and Consumer Commission (ACCC) and Treasury to “release these metrics, along with data showing the usage of new consent types, including CDR insights and business consents.”

“This would enable the ecosystem to holistically measure success, understand the most popular use cases, and celebrate the CDR being used to deliver benefits to consumers.”

D'Almeida explained the full scope of CDR legislation is still before parliament and yet to be passed, with the main driver ‘action Initiation’ which will enable for easier account switching.

“History has shown that the 'build it and they will come' mentality with fintech won't work. This is why we call on our banking partners to work with us on raising awareness of this tool, for the sake of addressing cost of living pressures,” D'Almeida said.

At a CDR Summit in Sydney on Wednesday, Scott Farrell, strategic counsel at King & Wood Mallesons told the audience establishing confidence “is a critical objective and critical achievement in reaching the next level of our consumer data right.”

“There are many things we can decide to do and decide not to do with our consumer data right.

“If we broaden the scope of the consumer data rights to more data sets, deepen the functionality to enable actual initiation and align the CDR with our new digital infrastructure for payments and identification then our CDR can level up from just operation into performance,” Farrell said.

He said “if we don't continue to develop a CDR towards success that we might need to imagine a different future for Australian customers.”

Farrell cautioned that without the CDR “there may be no safe, efficient and fair framework for that data sharing for Australian businesses.”

“This could mean that many struggle to get a foothold in the digital economy, potentially stifling innovation and competition across the real economy.

“For Australians, it could mean that many do not get to share in the benefits of a digital economy, suffering from digital exclusion,

“For other customers who are able to engage, their choices could be restricted to those made available on the one or two platforms which they use. There is more likelihood of those choices being constrained,” Farrell said.