ABA head says Australia’s CDR regime “isn’t delivering for customers or enhancing competition”
The Australian Banking Association (ABA) has unveiled the findings of a strategic review into the progress of the country’s Consumer Data Right (CDR) initiative, four years after its initial implementation.
ABA head says CDR has “not realised its potential”
The CDR regime, launched for Australian major bank customers in July 2020, is an opt-in open banking service that enables consumers to share their data. If they agree, the information is transferred using secure automated data technology.
The review, commissioned by ABA and conducted by Dublin-based business consulting firm Accenture, concludes that the CDR regime, according to ABA CEO Anna Bligh, “has not fulfilled its potential”.
By the end of 2023, only 0.31% of bank customers were using CDR, and more than 50% of data-sharing arrangements were either discontinued or allowed to lapse during the year, according to the report.
Despite around AUD 1.5 billion in heavy investment into the “success” of CDR by Aussie banks, Michael Lawrence, CEO of the Customer Owned Banking Association, says the initiative has made it “more difficult for smaller banks to compete by tying up resources with little to no tangible return”.
The review says that CDR is harming competition in the industry as mid-tier and regional banks face significantly higher compliance costs compared to major banks. Furthermore, it adds that these elevated compliance costs are forcing smaller banks to make “trade-offs”, with “vital technology and customer projects being deprioritised”.
“Australians have enthusiastically embraced digital innovations in banking such as mobile wallets and PayID, however uptake of the CDR has been comparatively low,” says Bligh.
“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,” she concludes.
Lawrence adds: “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.”
