Government's policy should yield benefits by next financial year, minister says
By the next financial year, customers will begin to see “real and tangible benefits” from a new data-sharing scheme that aims to make it easier to apply for a mortgage or switch banks, according to Australia’s financial services minister.
In a speech to the Committee for Economic Development of Australia, senator Jane Hume provided an update on the government’s Consumer Data Right (CDR) policy, according to a report by The Australian. The CDR was first announced in 2017.
Hume described it as “pipes” for the secure sharing of consumer data. She said it would replace “band-aid” offerings that tried to make it easier to collate customer data. As an example, Hume cited the practice of “screen-scraping” – a data-gathering process in which a customer shares their internet banking and passwords with a third party.
“Many of us have agreed to a practice known as screen-scraping, or have felt the need to share passwords – an obvious online safety risk – and the consumer has less control over what, how and when the data is used,” Hume said.
Hume said another option was price comparison sites – but that was comparing “apples to apples,” as those services weren’t personalised.
“Comparison systems in their current form simply can’t offer a level of personalisation or granularity that customers desire and deserve,” Hume said. “The CDR gives consumers and businesses the capacity to tap into and use their own data in a way that was either impossible, overly complex or fraught with privacy and security issues in the past.”
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Hume said that, over time, the CDR would drive far-reaching changes in the economy, The Australian reported.
“There is no denying that, as with any new system, there was an intense upfront build phase to put the rules, guardrails and processes into place before the benefits of the new way of working are adopted by the marketplace and felt by consumers,” she said. “But now, as we move into 2022-23, consumers will begin to see real and tangible benefits in ease of comparing products and switching.”
The CDR was expanded last year to allow service providers to take action on customers’ behalf, allowing them to close an account or switch to a better offer, The Australian reported.
“There is already a strong flow of CDR data in the banking sector, where consumers can use their personal data to switch banks, take out a loan, apply for a new mortgage or add new financial management tools like budgeting apps to their armoury,” Hume said. “As the CDR expands from banking into related financial fields, including general insurance, superannuation and the broader lending sector, there will be a substantial change to the way consumers can use their existing data to make better choices about the financial services they engage.”
