The ABA has released the outcomes of a strategic review conducted by Accenture on the implementation of Australia’s Consumer Data Right (CDR) framework. Launched in stages starting July 2020 for major banks and July 2021 for others, the CDR has faced challenges in gaining traction among consumers nearly four years since its inception.

Key findings from the review By the end of 2023, only 0.31% of bank customers were actively using the CDR. Over 50% of data-sharing agreements had been terminated or allowed to expire throughout the year. The banking sector, alongside substantial government funding, has invested approximately USD 1.5 billion into the CDR since 2018. Contrary to its intended purpose, the CDR has had a detrimental impact on competition, particularly affecting mid-tier and regional banks which bear disproportionately high compliance costs compared to major institutions. These high compliance costs have compelled smaller banks to make difficult decisions, often deprioritising crucial technology and customer-focused initiatives such as digital banking enhancements and fraud prevention. Other digital banking innovations, like mobile wallets and PayID, have shown significantly higher adoption rates within three to four years of launch. Specialists’ conclusions ABA CEO Anna Bligh emphasised the industry's collaborative efforts with the government in implementing the CDR, noting substantial investments made by banks to ensure its success. However, she acknowledged the review's conclusion that the CDR has not met expectations.

Michael Lawrence, CEO of the Customer Owned Banking Association (COBA), echoed concerns regarding the CDR’s impact on smaller banks, citing over USD 100 million in collective investments with minimal benefit to customers or competitive conditions. Lawrence urged for a clear roadmap to address fundamental issues before further commitments are made.In conclusion, both industry leaders called for a reevaluation of the current CDR framework, emphasizing the need for a renewed strategy to achieve its original objectives of enhancing competition and consumer outcomes in the banking sector. Origins and legislative framework The CDR in Australia emerged as a pivotal policy initiative aimed at enhancing consumer rights and fostering competition within the banking sector.

Its origins trace back to recommendations from the 2014 Financial System Inquiry (FSI) which highlighted the potential benefits of empowering consumers through improved access to their financial data. Subsequently, the Australian government committed to implementing the CDR framework as part of its broader digital economy agenda. The legislative groundwork was laid with the passage of the Treasury Laws Amendment (Consumer Data Right) Act 2019.

This Act provided the legal basis for consumers to securely access and transfer their banking data to trusted third parties of their choosing. The primary policy objectives of the CDR were twofold: first, to empower consumers by granting them greater control over their financial information, thereby enabling them to make more informed decisions about financial products and services. Second, to stimulate competition by lowering barriers to entry for new players in the financial services market, such as fintech firms and smaller banks, who could leverage consumer data to offer innovative products and services.

To support these objectives, the Australian Competition and Consumer Commission (ACCC) was tasked with overseeing the implementation of the CDR. The ACCC worked closely with industry stakeholders, including major banks, consumer groups, and technology providers, to develop technical standards and rules governing data-sharing protocols. These efforts aimed to ensure that data-sharing processes were secure, transparent, and compliant with stringent privacy protections outlined in the Privacy Act 1988 and other relevant legislation.

Overall, the CDR represented a significant shift towards a more open and competitive financial services environment in Australia, aligning with global trends towards greater data portability and consumer empowerment in the digital age. .