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…
Read More: Only 0.31 percent of bank customers using CDR: ABA – Risk
