Banking leaders in Australia have criticised the Consumer Data Right (CDR) regime, labeling it ineffective and overly expensive.
According to MPA, despite the banking industry’s substantial investment of $1.5bn in open banking since 2018, it has not delivered significant customer benefits or enhanced competition. The critique emerged following the release of the Australian Banking Association’s (ABA) strategic review conducted by Accenture.
The ABA and the Customer Owned Banking Association (COBA) revealed that public awareness and engagement with open banking are minimal. They also highlighted the disproportionate compliance costs for mid-tier and regional banks, which they argue stifles competition and deters further investment in digital technologies and scam prevention.
These observations were made public through a strategic review on the roll-out of Australia’s CDR regime, undertaken by IT giant Accenture.
In contrast, the Mortgage & Finance Association of Australia (MFAA) and NextGen, a leading technology provider for the mortgage lending industry, defended the CDR. They acknowledged the concerns about the high investment demands but noted a significant uptake of broker-originated lending facilitated by the CDR.
Since its introduction in July 2020 for major banks and a year later for other financial institutions, open banking has mandated that banks share crucial customer and product data.
ABA CEO Anna Bligh commented on the commitment of Australian banks towards the success of CDR, in partnership with the federal government. Despite significant efforts from the government, regulators, and the industry, the review clearly shows that the CDR has not realised its potential.
With only 0.31% of bank customers having an active data-sharing arrangement by the end of 2023, the adoption rate is significantly lower compared to other digital banking innovations such as mobile wallets and PayID.
Accenture’s review also underscored the considerable ongoing costs associated with CDR, prompting Bligh to suggest a reassessment of the current framework. “It’s time to go back to the drawing board,” Bligh stated. “The current CDR regime isn’t delivering for customers or enhancing competition, and a new pathway forward is needed.”
Keep up with all the latest FinTech news here.
Copyright © 2024 FinTech Global
