Issue 24: Changes to the CDR, more webinars, Waave promotes Pay to Bank and more Software Products and CDR Reps
It’s been a slow last two weeks with the industry looking at the changes that need to be in place for December this year. Frollo continues its webinars, New Zealand looks for payment options before the CDR goes live and the Registry makes some changes.
Changes to the CDR Rules
Changes to the Competition and Consumer (Consumer Data Right) Amendment Rules (No. 1) 2023 were announced last month and come into effect on 1 December 2023.
Summary of key changes
Allowing business consumers to share their data with more third parties
The amendment allows businesses to consent to Accredited Data Recipients (ADRs) sharing their CDR data with specified persons who are not accredited, like consultants, and other advisers who are not classified as Trusted Advisers under the old rules. It also allows disclosures to software providers that offer services to small businesses.
Extend business consumer use and disclosure consents from 12 months to 7 years
The maximum duration of a use and disclosure consent entered into by a business consumer increases from 12 months to 7 years. While 7 years is the maximum shorter consent periods can be selected. If the consent is offered for a period greater than 12 months the ADR must offer the option of 12 months or less. CDR Representatives cannot collect data for longer than 12 months.
Enhancements to CDR representative arrangements and CDR outsourcing arrangements
Changes around CDR Representative Arrangements and CDR outsourcing arrangements allow ADRs to engage outsourced service providers (OSPs) to assist them to provide goods and services to CDR consumers. The Amended Rules also clarify and strengthen obligations around CDR representative arrangements and CDR outsourcing arrangements and allow CDR representatives to engage OSPs.
Delay reciprocal data sharing obligations for newly accredited entities holding banking data sets
The Amended Rules delay the commencement of reciprocal data-sharing obligations for an Accredited Data Recipient who holds banking data sets until 12 months after they become an ADR.
Exemption from data sharing obligations for small-scale, publicly offered pilot products in the banking sector
Data Holders in the banking sector may offer small-scale pilot products (for up to 1,000 customers and for a 6-month maximum duration) without being subject to data-sharing obligations. This addresses possible disincentives under the CDR for Data Holders to introduce new products.
New obligation for CDR Representatives to adhere to the Data Minimisation Principals
CDR Representatives are now obligated to seek to collect no “more CDR data than is reasonably needed; or CDR data that relates to a longer time period than is reasonably needed; in order for it, or a relevant CDR representative, to provide the goods or services requested by the CDR consumer.” Bringing them into line with ADRs.
What the change actually means for Data Holders, Accredited Data Recipients, and CDR Representatives
CDR business consumer
The amendments create a new type of consumer, a “business consumer”. To be a business consumer you must be; a non-individual or a consumer that has an active Australian Business Number (ABN). This will allow business consumers to share data for up to 7 years which is more reasonable for a business. From an ADR perspective, this is good news, but it does mean they must identify business consumers and it’s not clear if that is an ongoing obligation. The identification process for an individual is an ABN check, there is no clarification on how a non-individual is checked but an ASIC search is likely the most reasonable approach. Accredit Data Recipients are now required to identify business consumers, this means they will need to understand if the consumer has an active ABN. For non-individuals, an ABN check is not required. Data Holders understand non-individuals very well and this will be easy for them to identify, however as most of the Data Holders make non-individuals fill in paper forms to nominate a ‘Nominated Representative’ so uptake will likely not increase much. The Accredit Data Recipient may also need to check the ABN before each data request as there is an obligation to confirm the ABN is active.
Currently, a consumer can share data from any of their personal or joint accounts regardless of product type. So you can share your personal accounts and business accounts in a single consent. For a maximum period of 12 months. The new business consumer consent will mean a longer consent duration but potentially needing to make two consents if personal and business data needs to be shared.
Business consumers get more options
ADRs will be able to share business data more widely than the current Trusted Advisors allow including sharing to software that supports small businesses. This will be helpful and will provide opportunities for new services.
CDR Representative changes
The CDR Representatives get a few new options including using Outsourced Service Providers. The changes don’t give them access to the new 7 year consent for business and introduce Data Minimisation obligations which will result in less CDR data being shared which will improve safety for consumers.
ADRs that hold Banking data sets will have 12 months delay in sharing obligations
Any new ADR that holds Banking data sets will have an automatic 12-month delay in sharing obligations. There are currently a few non-bank lenders that have been accredited as ADRs, they have had to request an exemption to sharing obligations. The change automatically grants a 12 month delay. It will be interesting to see if any new non-bank lenders decide to accredit.
Pilot product offering exemption from sharing
A change that is not likely to be used often will allow Data Holders in the banking sector to offer small-scale pilot products (for up to 1,000 customers and for a 6-month maximum duration) without being subject to data-sharing obligations.
Such offerings happen very infrequently so I can’t see much value in it.
Final thoughts
The big winners are CDR Representatives with a lot more options available to them to outsource. Small businesses, the real focus of these changes will get a few benefits, mostly a longer consent duration and more entities available to share data with. Accredited Data Recipients may now have ongoing obligations to check ABNs are active before requesting data in some cases. Non-individuals who have such a difficult time granting consent will continue to be left behind.
These changes represent all the changes suggested in the past other than Action Initiation.
Link to legislation: CDR Legislation Update
Frollo Money Management Opportunities webinar
Frollo continues its webinar sessions with a detailed discussion of the Money Management options within Open Banking.
Webinar link: Money Management Opportunities
Development of trust key to open banking
This article discusses the most recent Frollo webinar on the building of the Bank of the Future.
Wider use and acceptance of Open Banking and the CDR will be key to improving borrowers’ experience, lender heads have outlined.
“A lack of trust and understanding of Open Banking and the Consumer Data Right (CDR) is one of the largest barriers to lenders, borrowers, and brokers utilising the technology, according to a panel of industry representatives.”
“We found, when our researcher explained the process for gathering information through the Open Banking mechanism, that the trust factor went up significantly,”
The research also found consumer demographics influenced the trust that borrowers placed in the technology, with older individuals and females less trusting of the CDR than younger people and males.
The panel also emphasised the efficiency and time-saving benefits that Open Banking and the CDR could deliver, particularly for the home loan process, by taking the complexity of providing the significant amount of data needed to process a loan out of the borrower’s hands.
“There’s certainly opportunities to look at what can be done to straight-through process the lending data gathering, and processing to provide an exceptional member experience, especially during the home purchase” it was stated.
Another advantage was improving the security for borrowers, the panelists said.
Education
The panel called on the government to implement much-needed CDR education for the public, along with an improved settlement process so Open Banking could be more readily used.
For example, it was highlighted that some states still need a wet signature on loan forms and don’t take an electronic signature, which holds back the use cases of Open Banking.
“We need the government departments to catch up with the AI and the digital capability that we’ve got in order to make the process a lot better for the members and the customers.”
Article link: Development of trust key to open banking
Pay by Bank is here – why retailers need to act now
Waave sponsored article on the Pay by Bank feature and its possible benefits to retailers.
Waave an Accredited Data Recipient that is working on a payments platform to tap into the $3 billion annual merchant fee market makes some interesting points.
‘Waave is the first business to use Open Banking technology to launch both B2B and B2C payments in Australia. With its flagship product Pay by Bank, Waave aims to reinvent the world of payments. It’s a seamless and secure alternative payment method to traditional cards, allowing customers to pay instantly, directly, and securely via their bank. For merchants, Waave is up to 80 per cent cheaper than card payments, while providing instant authorisation, faster funds settlement and no dishonour charges or chargebacks – all because it bypasses the middlemen. Think of it as the new direct debit for the 21st Century, using the latest technology to dramatically improve the payment experience for consumers, while significantly reducing costs for businesses.’
Article link: Pay by Bank is here – why retailers need to act now
New Zealand Commission explores pathways for more innovative payment options
The Commerce Commission is looking at ways to remove barriers to more innovative payment options.
Commission Chair, John Small, says this work is aimed at promoting competition and efficiency in the retail payment system for the long-term benefit of businesses and consumers.
“We can require banks to provide access to the necessary systems ahead of CDR legislation going live, so that the sector is ready to meet the expectations it sets to deliver benefits to all New Zealanders.”
Dr Small says Payments NZ is coordinating work with banks and providers of new payment options on the requirements to enable a safe and trusted environment for new entrants to create innovative options to enable in-person bank transfers.
The Commission is seeking views on its characterisation of the issues and opportunities in this space.
Media release link: Commission explores pathways for more innovative payment options
CSO Executive Sessions Australia with Murray Wayper, CISO at Biza
Podcast from CSO with Biza Chief Information and Security Officer Murray Wayper. Focusing on digital security.
Youtube link: CSO Executive Sessions Australia with Murray Wayper, CISO at Biza
Cruz moving to Yodlee?
Yodlee has landed a new CDR Representative Cruz Money Pty Ltd. That’s the same Cruz that currently has a CDR Representative arrangement with Basiq. Cruz is a trading name for Hard Line Wealth Holdings Pty Ltd. Basiq has an active software product DRSP000093 for Cruz Financial Planning which has been running for some time now.
Yodlee has not created a custom software product for Cruz Money as yet. And Basiq’s agreement with Hard Line Wealth ends on the 25th of August.
So we are seeing possibly the first movement between Accredited Data Recipients of CDR Representatives.
Is the Registry still having issues?
Over the last month, the Registry www.cdr.gov.au has had issues displaying Accredited Data Recipients. Major brands such as Fiskil, Frollo, Mastercard, and Yodlee were missing from the public listing.
Now we are seeing some odd CDR Representative listings. Frollo no longer has any CDR Representative Arrangements, they should still have Wagestream which ends later this month.
Yodlee’s listing now includes the following CDR Representatives that they have entered into historically:
IGG Software Inc, dated 30/5/2023
Intelliflo Australia Pty Ltd dated 24/04/2023
Moneysoft Pty Limited dated 29/6/2023
Savvy Digital Pty Ltd dated 21/6/2023
Tax Lepard Pty Ltd dated 1/12/2022
Technology One Limited dated 29/03/2023
These new CDR representatives make Yodlee the third-largest provider by numbers.
CDR Representative Arrangements
Basiq Pty Ltd
Investlogic Group Pty Ltd
Start Date: 27/07/2023
Notes: Property investment platform.
Web page: https://investlogic.com.au/Basiq Pty Ltd
Very Social Capital Pty Ltd
Start Date:m 11/7/2023
Notes: Startup.
Yodlee Inc
Cruz Money Pty Ltd
Start Date: 25/07/2023
Notes: Hard Line Wealth Holding Pty Ltd, trading as Cruz Financial Planning.
Web page: https://www.cruzplanning.com.au/
Yodlee Inc
Raiz Invest Australia Limited
Start Date: 24/07/2023
Notes: Investing app.
Web page: https://raizinvest.com.au/
New Software Product
Basiq Pty Ltd
DRSP000190 - BENEVOLENCE GROUP AUSTRALIA PTY LTD
Active
Basiq Pty Ltd
DRSP000192 NOW FINANCE GROUP PTY LTD
Active
Yodlee, Inc,
DRSP000197 - envauobcts
Active