Banks urge re-think on data sharing platform

Man on computer sharing data. | Newsreel
A multi-million data sharing program is being used by less than one percent of bank customers. | Photo: Skasit Sangtong (iStock)

A national data-sharing program which has cost government and banks hundreds of millions of dollars to implement and maintain is being used by less than one percent of customers.

A strategic review of Australia’s Consumer Data Right (CDR) regime by the Australian Banking Association (ABA) found the system, which has been operating for four years, was being used by 0.31 percent of bank customers.

The CDR website states the initiative gave Australians more control over their data, enabling them to access and share data with accredited third parties to “access better deals on everyday products and services”.

The Federal Government launched the program for Australia’s four main banks in 2020 and invested $111m in the 2021-22 budget to extend the program to other banks.

It introduced the program to energy providers in 2022 and last year invested another $88m into the program, according to a timeline on the CDR website.

ABA CEO Anna Bligh said the banking industry had invested around $1.5 billion into CDR since 2018.

Ms Bligh said contrary to its intent, the CDR was negatively impacting competition in the sector as mid-tier and regional banks incurred disproportionately higher compliance costs compared to major banks.

In addition to the low usage among bank customers, Ms Bligh said the strategic review, undertaken by Accenture, found that more than 50 percent of data sharing arrangements had been discontinued or allowed to lapse in the last year.

She said high compliance costs were forcing difficult investment trade-offs, particularly for smaller banks, leading to vital technology and customer projects being deprioritised.

The review found other digital innovations in banking, such as mobile wallets and PayID, had materially higher customer uptake in the years since CDR was launched.

“Australian banks have invested heavily to secure the success of CDR,” Ms Bligh said.

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

She said Australians had embraced digital innovations in banking, however uptake of the CDR had 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.”

Customer Owned Banking Association CEO Michael Lawrence said customer-owned banks had collectively invested over $100 million in CDR, with very little benefit to customers or competition.

“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,” Mr Lawrence said.

Read the full review.