Insights from the Consumer Data Right Event Showcase
Indue’s Head of Innovation: Jenny Osborne attended the Consumer Data Right (CDR) conference featuring local and international experts, policy makers and founders who discussed the future of the CDR and showcased some exciting emerging use cases. There were ‘use case showcase‘ pitch-style session where founders presented about the CDR powered use cases they are building and bringing to market across payments, lending, climate tech, financial management, financial literacy. Some of the key takeaways from Jenny included:
The Consumer Data Right:
- allows consumers to safely share the data that businesses hold about them
- helps consumers compare between products and services to find offers that best match their needs
- encourages competition between providers, leading to more innovative products and services.
Currently CDR rolled out to Banking and Energy sectors, with plans to move to non-bank Lenders. There have been delays announced recently to the roll out for telecommunications, insurance and superannuation, with expectations it wont be reassessed until end 2024, this recommendation is in line with the independent statutory review that occurred citing the CDR needs time to mature. This also includes the implementation of action initiation, which will require a robust framework to support implementation.
To help CDR players understand the technical requirements ACC have introduced a new consumer data right portal to guide participants through technical requirements.
Keynote address: Australia’s Consumer Data-sharing Regime – A World-Leading Sanitation System for the Digital Economy
According to Scientia Professor Ross Buckley, UNSW it would have been better for Australia to start with simpler industries like Telecommunications or Insurance instead of Banking. He believed that Banking is a complex industry due to the high level of regulation and the large number of players involved.
The implementation process has been sluggish due to some participants exhibiting real inertia and resistance. Banks are also moving at a slow pace. Historically, banks have perceived customer data as their own and have been reluctant to relinquish control. Although many citizens believe that data pertaining to them should be theirs and not belong to banks or any other entity collecting it, privacy legislation supports this notion. However, legally, data is non-rivalrous and cannot be owned by anyone. Citizens have the right to control their data but not to own it.
The CDR will mature as more industries join and collaborate. However, without a formal regulatory regime, the absence of standards makes effective data sharing challenging. Limited data sharing will always constrain the growth of the digital economy. Therefore, it is essential for a policy agency to lead the process, rather than a regulator. An adaptable, living, and responsive framework is necessary for success.
According to his belief, the most prosperous companies view CDR as a data business and subsequently transform it into credit.
Data is the new oil – Globally the top 5 global companies pre-tax profit profile has shifted from all oil to a much bigger focus on Data companies (2 oils, 3 data companies) However, in Australia the top 5 companies are the same as 40 years ago.
Platforms – are the most profitable business model on planet, platforms are enhancing customer experience.
In the UK Action Initiation has really accelerated. Action Initiation “Write access” provides consumers with the power to instruct accredited organisations to initiate actions on their behalf (current framework, consumers can only consent to accredited entities being given access to their data in read-only form).
Action Initiation allows products to become more customised based on risk/ behaviours to enrich the data. Although Consumer Data Right (CDR) presents both risks and opportunities for businesses, it can make options and switching simpler for consumers, and therefore, reducing the likelihood of retaining customers unless businesses are highly proactive in their customer-centric product offerings.
Governments have to bring change and encourage digital identity, driving the digital economy is critical.
CDR and the future of payments
The much anticipated ‘action initiation’ under the Consumer Data Right is on the way, with legislation in Parliament and fresh funding in the recent Federal Budget.
PayTo is a payment initiation system that falls under the Consumer Data Right (CDR). Consumers can use PayTo to kickstart payments and authorize them, with a unique feature of mandates permission. This system is compatible with CDR, and PayTo has mandates that allow others to debit your account, like in the case of gym memberships. This gives consumers the advantage of viewing, cancelling, and amending payments within the app, making subscriptions more manageable. However, there are still legal issues to consider, such as contractual obligations for a 12-month gym term. PayTo was created to replace Direct Debit and speedy fund transfers, but it doesn’t cover all use cases yet. Nevertheless, CDR can fill in the gaps where PayTo falls short.
Adopting NPP and PayTo has taken banks a significant amount of time, and it’s clear that initiating action will require more urgency and support. The regulator can play a critical role in encouraging banks to adopt these systems. While banks have eventually come around and are providing quality, compliant products, it’s important for the government and states to rally the banks. There’s a lot of interest in B2B opportunities for PayTo, like engaging companies for payroll, direct debits, improved controls, automation, and real-time movement of funds. For instance, a skydiving business could benefit from PayTo by reducing the risk of not receiving payment from a travel agent. Under NPP PayTo, the payment would be initiated immediately upon receipt of the coupon, reducing the risk. There are also opportunities for increasing process efficiency by reducing steps, friction, and time.
With PayTo, transferring payments from one bank to another for bill payments will be made possible. This is due to the increasing integration of payments through open data in the CDR system. AP+ recognizes that there is no clear set of rules on where CDR and PayTo begin and end and how they can be effectively merged. During discussions, there was a common theme of overlap between NPP/PayTo, CDR, and Digital Identity and the need for standardization with the involvement of the government and other stakeholders.
Part 1 of this 3 part series.