The Consumer Data Right (CDR) landscape continues to evolve, following the introduction of changes to accelerate consumer adoption, increase the number of use cases, and deliver participants more “bang for their buck”.
On August 9th, Australia’s Assistant Treasurer and Minister for Financial Services, Stephen Jones, delivered a much-anticipated address on the CDR at an event in Sydney organised by the Committee for Economic Development of Australia. The speech contained a series of announcements designed to “reset” the CDR, including the release of draft Rules which propose changes intended to boost uptake and reduce complexity.
These announcements pave a focussed and refined pathway for increasing participation across the CDR ecosystem and demonstrate the Government’s commitment to the CDR.
In this blog post we summarize the key updates from the Assistant Treasurer’s address that we think will deliver value for consumers and businesses who leverage the CDR to unlock the power of their data and payments.
1) Simplifying the consent experience and increasing conversion
The importance of smooth and easy-to-navigate open banking consent flow experience is well understood. There is a direct link between simple consent processes and high conversion rates. As such, we welcome the inclusion in the draft Rules proposed amendments that remove undue complexity and friction from the CDR consent flow. The most significant of these amendments would allow the bundling and pre-filling of consent elements, where these items are “reasonably needed” in order to provide a good or service and reduce the number of actions required to be taken by the consumer. Other proposed amendments look to streamline the information required to be presented to the consumer both during and after the consent process.
2) Making it easier for banks to leverage the CDR
While there has been plenty of conjecture recently around the true rate of consumer adoption of the CDR, most participants would agree that uptake is not as high as it could be. One of the key mechanisms through which consumer uptake can grow is ensuring that Australian Banks themselves can easily leverage the CDR for their own lending, personal finance management and other use cases. The draft Rules propose changes that will help do exactly that, by broadening the scope of an existing provision which (in certain circumstances) allows Authorised Deposit-taking Institutions to hold CDR data they have collected as a Data Holder, rather than an Accredited Data Recipient. While this may seem like a minor technical change to an existing provision, our view is that it will have a material impact on the ability of banks to get “bang for their buck” and leverage the CDR as a driver of growth, rather than merely a compliance exercise.
3) Smoother onboarding for business users
The CDR has previously seen changes designed to boost business participation, including most relevantly the introduction of the Business Consumer Disclosure Consent (BCDC). However, the process for appointing nominated representatives (which in some cases can even involve paper forms) has been a widely acknowledged source of friction for many business users. The draft Rules aim to alleviate some of this friction, with a new requirement for Data Holders to simplify their current processes and offer an online process allowing existing account administrators to be appointed as nominated representatives. Digitising this part of the journey will have a meaningful impact on business conversion rates, by removing what has served as a key barrier to CDR adoption by businesses to date.
4) Action initiation will become a reality
In the period since the Assistant Treasurer’s address, the action initiation bill has been passed by the federal Parliament. This development represents the next big step along the journey of the CDR to realise its full potential as an economy-wide data portability and payments regime.
Importantly, while passage of the Bill establishes the legislative framework for action initiation, much work still needs to be done (including designation of action types, rule-making and standards-setting) before any obligations will go live. Nonetheless, this is a crucial milestone that demonstrates a strong commitment and investment into the CDR from the Government.
5) Screen-scraping will be phased out in Australia
The Assistant Treasurer’s remarks included the strongest language yet on screen scraping and the position was unequivocal: if industry does not accelerate its transition away from this practice, the Government will step in and legislate a ban. With many banks already taking steps to block screen scraping (including through the implementation of multi-factor authentication), and the Government having asked Treasury for formal advice on the steps needed to implement a full and formal ban, it is clear the die has been cast. In light of this, industry participants who are still relying on screen scraping connectors for access to banking transaction should now consider planning their transition to the CDR.
A trusted open banking player
Mastercard is an unrestricted Accredited Data Recipient (ADR) in Australia and is actively involved in the CDR ecosystem – for good reason. Open banking is a global priority for Mastercard who is supporting the growth of open banking in Australia and working to increase consumer uptake and ensure more Australian consumers and businesses benefit from the CDR.
Mastercard offers open banking solutions to our financial institution partners and fintechs alike, helping them to reliably access, securely transmit and manage consumer data – to meaningfully enhance their customer experience in a rapidly changing market.
