Australian Banking Association: CDR has ‘not realised its potential’

Australia’s Consumer Data Right (CDR) regime “isn’t delivering for customers” and is negatively impacting competition in the banking sector, despite significant investment by the country’s banks, according to a strategic review.

The Australian Banking Association (ABA) released the findings of a review it commissioned Accenture to undertake, with the aim to understand how Australians are using CDR.

The review revealed that at the end of 2023, only 0.31% of bank customers were using CDR, while more than 50% of data-sharing arrangements had been discontinued or allowed to lapse throughout the year.

It found that Australia’s banks had invested $1.5 billion into CDR since 2018, in addition to investment from government.

CDR went live to customers of the major banks in July 2020, while customers of other banks followed in July 2021.

However, the review concluded that the regime is “negatively impacting competition in the sector as mid-tier and regional banks incur disproportionately higher compliance costs compared to major banks”.

The strategic review also identified that high compliance costs are “forcing difficult investment trade-offs”, in particular for smaller banks which, in turn, is leading to “vital” technology and customer projects being deprioritised.

Anna Bligh, chief executive officer of the ABA, said: “Australian banks have invested heavily to secure the success of CDR.

“Despite the best efforts of government, regulators and industry, this review makes it clear that CDR has not realised its potential.”

She added: “Australians have enthusiastically embraced digital innovations in banking, such as mobile wallets and PayID, however uptake of the CDR has been comparatively low.”

Bligh said that it was time to “go back to the drawing board”, adding that “the current CDR regime isn’t delivering for customers or enhancing competition and a new pathway forward is needed”.

Michael Lawrence, chief executive officer of the Customer Owned Banking Association, said: “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.”

Last month, the fourth edition of the Australian Open Banking Ecosystem Map and Report, published by Fintech Australia, suggested that CDR has continued to grow, adding new use cases and is now in the “consumer adoption phase”.

It reported that 98% of data holders are now active, with 80 of those authorised deposit-taking institutions and 114 data holder brands.