The new age of consumer data rights: Where are we at?

  • By David Giddy

Deloitte’s David Giddy assesses what organisations need to do if they are to fully participate in Australia’s new open data regime.

Open Banking in Australia is now almost ready to launch.   

From 1 July, a new era in financial services will begin, when the major banks start to share data with accredited data recipients with the consent and at the request of customers.

While there had been concern that the current pandemic would further delay the start of data sharing, in reality the key players are well advanced, and Australia's competition regulator and national consumer law champion, the Australian Competition and Consumer Commission (ACCC), is pressing ahead.

The regulator has however, given an additional three months to the non-major banks to commence sharing their product reference data in recognition of the impact of the COVID-19 pandemic, and the relative readiness of the majority of the non-major banks.

Earlier this year, the ACCC released a consultation paper on the timing of the various phases of data sharing for the non-major banks, in which it suggested a possible delay to the commencement of sharing of account and transaction data to 1 July 2021.

Whether this will be further delayed due to the pandemic is currently unknown

Where are we headed?

Even before customer data sharing has commenced, two inquiries – the Senate Inquiry into FinTech and RegTech, and Scott Farrell’s Inquiry into Future Directions for the Consumer Data Right – are looking at how the CDR may evolve.

The Senate Inquiry has received many submissions requesting changes to the CDR regime – including lowering the cost of participation for FinTechs, the inclusion of ‘write access’, the extension of the CDR to include superannuation, the relationship to the New Payments Platform, and financial crime reporting.

Submissions to Scott Farrell’s Inquiry closed on 21 May.

The terms of reference included key issues such as the extension of the CDR to include ‘write access’, which, in the context of banking, is mainly about the ability to initiate payments - something the UK and Europe already permit.

Other dimensions of the Inquiry include the treatment of vulnerable consumers, linkages and interoperability with other infrastructures and frameworks such as the New Payments Platform, facilitating product switching, and leveraging international open banking initiatives.

At the end of December 2019, the ACCC also issued a consultation paper to amend the CDR rules to facilitate participation of intermediaries - third party service providers that collect or facilitate the collection of CDR data from data holders on behalf of accredited persons.

The regulator is expected to release draft rules for intermediaries soon, which could extend secure access to CDR data to organisations without the resources required to become an unrestricted Accredited Data Recipient.

The CDR is intended to be an economy-wide reform that, while starting in banking, will soon embrace the energy and telecommunications sectors, with Treasury releasing the draft designation instrument for the energy sector in May 2020.

The Inquiries are also exploring which other sectors have the potential to drive substantial consumer benefits. A sector that has stimulated a lot of interest in this potential is superannuation, a natural complement to banking.

What does this mean for me?

1 . Start with compliance

Anyone participating in the Consumer Data Right will need to ensure that they are compliant with over 140 obligations introduced by the new regime.• Do you know what your obligations are? Which of the 140+ apply to you?

2. Reimagine the future

It is clear to see how programmatic, flexible access to consumer information, will fundamentally change the way people interact with financial institutions.

Bill Gates put it best in saying that: ‘We always over estimate the change that will occur in the next two years and under estimate the change that will occur in the next ten.

Don't let yourself be lulled into inaction.

 - Are you confident you are compliant across your business?

 -Are you confident that you have the processes in place to remain compliant?

The range of ‘extreme but possible’ futures needs to be developed and stress tested against your current organisational strategy.

3. Build a detailed view

Practical details will be required to bring hypothetical future scenarios to life.

- If the way your customers engage with you changes, how will you need to alter your customer relationships to succeed?

- Will you need to partner with other organisations, or should you develop capabilities in-house?

- How will this practically impact management systems and processes, including for example, data governance and privacy?

4. Work backwards from the outcome

With these new potential futures in mind, how should you adapt your corporate and business strategy?

- What are the signals and market triggers you will need to respond to? •

-What are the ‘no regrets’ investments you can make up-front?

While the speed at which consumers will experience changes as a result of the introduction of Open Banking is uncertain, in the longer term consumer data sharing promises to bring in a new era in financial services.

David Giddy is a Principal in Deloitte’s Australian Open Banking and Payments Advisory practice. He has focused on technology, product development and management, with a particular focus on payments and transaction solutions over the course of his 30 years industry experience. Key areas of expertise include Open Banking assurance and propositions, strategy development and execution across areas including cards, mobile, new products and digital payments.