Key Findings
At the end of 2023, 0.31% of bank customers had an active data sharing arrangement. This compares unfavourably with consumer adoption of other digital innovations in banking.
- The CDR rollout has required substantial investment from both government and industry participants and continues to incur significant ongoing costs. The banking industry alone is estimated to have spent ~$1.5b since 2018.
- Low customer adoption and significant compliance costs are driving unintended outcomes:
- Diminished ability for data holders to invest into ADR functionality as compliance costs are crowding out strategic investment.
- Resourcing requirements for CDR compliance have limited the capacity for other technology investments that are more aligned to consumer demand (e.g. payments, app)
- Competition within the banking sector is being negatively impacted as Mid-Tier banks (which have lower overall capacity for technology delivery) incur disproportionately higher relative costs compared with Major banks (more than twice the cost per customer sharing their data).
The banking industry recognises the benefits CDR infrastructure can enable. However, challenges in policy and standards design, and implementation have impeded the CDR’s success. These include unsubstantiated consumer propositions, an absence of a robust cost/benefit governance framework, and excessive complexity and prescriptiveness in compliance obligations.
Analysis of open data regimes globally indicates there are additional factors external to the policy environment that contribute to or hinder overall success. Successful data sharing regimes (e.g. Brazil, India, Singapore) typically exhibit enabling infrastructure and clear consumer propositions – factors recognised in the design of their respective data sharing models. This suggests there is not a ‘one size fits all’ model to open data, and that policy design can improve adoption when responsive to national endemic factors.
The Farrell Review into Open Banking outlined guiding principles for the CDR’s implementation: ‘customer focus’, ‘promote competition’, ‘encourages innovation’, ‘efficient and fair’. When measured against these, the CDR has fallen short of expectations.
Read full report at https://www.ausbanking.org.au/wp-content/uploads/2024/07/CDR-Strategic-Review_July-2024.pdf