The consumer data right stands as one of Australia’s most innovative policy initiatives in recent years. Designed to give consumers control over their data and foster competition, the CDR has positioned Australia as a global leader in data portability and consumer empowerment. However, recent developments suggest this progress may be at risk.
Earlier this month, the Australian Banking Association released a report questioning the value of the CDR relative to its implementation costs. While the report raises some valid points about the challenges of implementation, it has been heavily criticised by the Australian FinTech community as it fails to fully acknowledge the long-term benefits of the CDR or the role banks have played in shaping the current framework.
The CDR establishes the principle that data about consumers should belong to them, a significant shift from the status quo where personal data has been largely controlled by corporations and government entities. This change has the potential to revolutionise how Australians manage their finances, choose service providers, and protect their personal information.
However, the ABA’s report, by focusing primarily on short-term costs and using selective data, risks undermining the broader vision of the CDR. The banking industry’s profits – $32.5 billion last year – also raise questions about the appropriateness of their concerns over implementation costs. The CDR exists to benefit consumers, not to protect the profit margins of large financial institutions.
It’s also worth noting that much of the work banks have done to comply with CDR requirements has involved technical improvements that were likely necessary regardless of the CDR’s implementation.
That said, it’s important to acknowledge that the CDR’s implementation has not been without challenges. Adoption rates have been slower than initially anticipated, and there have been technical hurdles to overcome. These issues deserve attention and should be addressed to ensure the CDR reaches its full potential.
The next critical phase for the CDR is the introduction of ‘action initiation’ capabilities. This expansion would allow consumers to not only access their data but also initiate actions through the CDR framework, such as switching bank accounts or energy providers. This functionality has the potential to significantly enhance competition and consumer choice across multiple sectors.
Unfortunately, this is precisely the area where we’re seeing increased resistance from incumbent players. The concerns raised by the banking industry about this expansion deserve careful consideration, but they should be weighed against the potential benefits to consumers and the broader economy.
As we approach the tabling of legislation to enable CDR actions in the Senate this August, the government faces a crucial decision. Will it stand firm on its commitment to consumer empowerment and digital innovation, or will it yield to industry pressure and potentially dilute the effectiveness of the CDR?
The CDR is not perfect, but it represents a significant step forward in giving consumers control over their data. Many of the current limitations and challenges can be addressed through continued collaboration between government, industry, and consumer advocates. The banks, as key stakeholders and co-creators of the CDR framework, have a responsibility to engage constructively in this process rather than seeking to undermine it.
The government, for its part, must resist the temptation to take the path of least resistance. Instead, it should double down on its commitment to the CDR, addressing legitimate concerns while ensuring the regime continues to evolve in the interests of consumers and innovation.
The CDR has the potential to drive significant economic benefits through increased competition, innovation, and consumer empowerment. The decisions made in the coming months will determine whether Australia continues to lead in the realm of consumer data rights or whether we allow this opportunity to slip away.
The CDR represents a rare instance of truly forward-thinking government policy. It would be a shame to see its promise unfulfilled due to short-term thinking, political neglect or resistance to change.
As we move forward, all stakeholders must work together to ensure the CDR delivers on its promise of a more competitive, innovative, and consumer-friendly digital economy.
Barry Thomas is the former assistant secretary and general manager of the Data Standards Body, and James Bligh is the former lead architect of the Data Standards Body
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