Over the past six weeks, we have seen perhaps some of the most significant advancements since the CDR went into effect. Keeping track of these changes in what is a constantly evolving legislative environment can be tricky. So, let’s take a look at some of Treasury’s key recent announcements, and the impact they are set to have.
Widening access to CDR data via new access models
In October 2021, the Australian government announced it would add three new access models to the CDR legislation, allowing companies to access and use CDR data without needing to go through the costly process of becoming an accredited data recipient. Instead, third party providers and intermediaries could act as a CDR representative or sponsor for other financial institutions.
As of 1 February 2022, these new models officially came into play. Australia has expanded access to CDR data via the introduction of the Sponsor-Affiliate model, which allows an unaccredited affiliate to access CDR data via their accredited sponsor; the Trusted Adviser model, which will see consumers being able to nominate a professional, such as a financial or legal advisor, to access limited CDR data for the purposes of providing advice; and the CDR Insights model, which will allow unaccredited third parties to use CDR data for the purposes of a yes or no decision, such as account or balance verification.
CDR to be expanded to the telecommunications sector
In late January, it was announced that the CDR would be expanded to cover Australia’s telecommunications sector, following its continued roll out across the banking industry, as well as the energy sector – which is set to come into effect in November of this year. This latest move will see data from telecommunications firms be shared with accredited data recipients to make it simpler for consumers to compare and switch providers depending on their specific use case.
With a consumer’s consent, for example, a comparison site would be able to analyse an individual’s use of telecommunication services – including data, calls and text, among others – and recommend a more affordable provider to meet that individual’s needs. This would make it simpler for consumers to switch onto a more affordable plan, encouraging competition and innovation in the sector and ultimately benefiting Aussies via better and more affordable telecommunication products.
Expanding the CDR beyond open banking and into open finance
Perhaps the most ambitious and exciting recent development – and a step towards even further ubiquity – is the federal government’s plan to expand the CDR regime to open finance. This expansion would allow for the transfer of personal financial data beyond the current limits, and would make it possible for insurance, superannuation, merchant acquiring and non-bank lending service providers to share data via secure Application Programming Interfaces (APIs).
This development will enable fintechs to offer what Treasurer John Frydenberg refers to as 'personal finance and life administration apps'. These products would be able to consolidate banking, energy, telecommunications, superannuation and insurance data to provide consumers with a singular, holistic picture of their financial situation to support better financial decisions and recommendations.
Australia is fast becoming a global leader in open data regimes, and both the Australian financial ecosystem and Aussie consumers stand to gain significantly from it. As the CDR continues to be expanded to more sectors and datasets, expect financial products and services to become more powerful and useful across a broad range of use cases. The ultimate goal is for Australia to have a truly open data economy, and consumers to have access to best-in-class products and services as a result. These recent CDR developments have taken us a few steps closer to making that a reality.
Tonia Berglund, director of product, Envestnet|Yodlee
