Issue 51: Welcome to 2025!
Happy Australia Day, and welcome to 2025! I thought I would start the year by looking at the CDR reset and how it will impact the industry.
Will 2025 be the year of the CDR reset?
The Consumer Data Right (CDR) has promised a new era of data-driven innovation since it went live in July 2020. While Open Banking was the first major step, the CDR has always been slated to expand into other sectors, including energy, telecommunications, and more. With a renewed focus on consumer empowerment, data protection, and industry competition, many in the sector are pointing to 2025 as a pivotal moment. The CDR is about to be reset!
The reset is a plan by the Australian government to improve the CDR and make it more accessible to consumers. The reset includes:
Simplifying consent rules: Allowing multiple consents to be bundled into one action
Expanding the CDR: Including non-bank lending and "buy now, pay later" products
Reducing costs: Removing the requirement to share data for niche products and narrowing the scope of obligations
Focusing on high-priority use cases: Such as consumer finance, energy switching, and accounting services
Reducing barriers to participation: Requiring Data Holders to provide a simple way to appoint a nominated representative
Banning screen scraping: Moving away from screen scraping where the CDR is a viable option
Action Initiation: Also known as "write access", Action Initiation allows accredited third parties to take actions on the consumer's behalf
But what exactly might that reset look like, and what are the opportunities and obstacles on the horizon?
A Brief Recap of the CDR’s Ambition
The CDR was designed to enable consumers to control how their data is shared among accredited service providers. It originally launched within banking, empowering customers to grant secure access to transaction data, account details, and more—paving the way for innovative financial services and improved consumer experiences. Over time, the intention was (and still is) to extend the CDR into additional industries, thereby creating a cross-sector ecosystem of data-driven services.
Despite these goals, the rollout has been incremental and, at times, fraught with delays and debates over compliance, security, and consumer protections. While critical foundations are now in place, participants and regulators alike are reflecting on how to accelerate adoption and refine the framework. Many see 2025 as a turning point for addressing lingering issues and giving the CDR a refreshed sense of purpose and practicality.
Impacts of the reset
Let’s look at each initiative and see how much impact it will have:
Simplifying consent rules. Bundling different consents into one action will make the process simpler for consumers. It will be applicable to all software products.
Result: Big improvement
Expanding the CDR. The move to include non-bank lending and "buy now, pay later" products is not likely to significantly increase uptake, mainly due to the limited nature of the products.
Since the non-bank sector can’t offer deposit accounts, the data available will be loan-related. There is only one main software product that would use this data, Personal Finance Management (PFM).
Result: Limited improvement
Reducing costs: Removing the requirement to share data for niche products and narrowing the scope of obligations will assist all Data Holders but smaller Data Holders the most.
Result: Very limited improvement
Focusing on high-priority use cases: It will be beneficial to focus on consumer finance, energy switching, and accounting services, but this relies on Accredited Data Recipients (ADRs) offering these products.
Currently, there are only a handful of consumer finance-related software products that are focused on new customers for the lender. The smallest market segment generally.
There is also a reliance on consumers having digital access to their energy accounts, which is generally lower than digital banking rates.
Another dependency is to improve the Nominated Representatives process for business accounts.
Result: Limited improvement
Reducing barriers to participation: The requirement for Data Holders to provide a simple way to appoint a Nominated Representative would have a major impact. The current process is generally paper-based and very complex.
The main issue here will be the very significant uplift Data Holders will be required to make to achieve it. This will likely result in the Data Holders again focusing on compliance and postponing collecting data.
Result: Big improvement, but very difficult to achieve
Banning screen scraping: Unfortunately, I can’t see the CDR maturing enough to allow the government to ban screen scraping completely. The best option would be a partial ban on banking products offered by Australian Deposit-taking Institutions (ADIs). Banking is the most mature segment of the CDR and has the highest volume of activity.
Result: Low improvement
Action Initiation: Allowing the ADR to make transactions on behalf of the consumer is a game-changer. This would allow the ADR to transfer funds internally to increase interest earned or save fees and charges from occurring. Unused accounts could be closed, therefore saving on fees or increasing lending limits. New accounts could be opened and funds transferred. The possibilities are enormous.
However, there is a downside. How will the Data Holders manage these transactions? Allowing third parties to open or close an account, let alone transfer funds, has significant impacts. Banking products, in particular, are complex. Some bonus interest payments rely on no withdrawals or result in heavy transaction fees. If there is a dispute, how will it be managed? If the funds are being transferred out of the Bank to another bank, how will the fraud risk be managed?
Action Initiation is critical to getting the CDR working as intended. But there are a lot of unanswered questions, and Banks, in particular, don’t like that.
Implementation will be very difficult.
Result: Enormous improvement - if it can be made to work in a uniform manner for all Data Holders
What’s missing from the reset?
While the CDR reset is broad and provides a road map to a vastly improved CDR, there are challenges ahead:
Maintaining Consumer Trust
Security breaches or misuse of data could quickly undermine the CDR. Every stakeholder must prioritise robust cybersecurity measures and transparent data-handling practices to retain public confidence. There have been a number of high-impact data breaches recently that resulted in considerable consumer anxiety around their data and how it is used.Complexity of Compliance
Despite efforts to simplify accreditation, smaller players may still find compliance daunting. Ongoing collaboration between government, industry bodies, and technology providers is essential to ensure that the framework remains accessible and does not inadvertently stifle innovation.Overcoming Consumer Apathy
Even with streamlined consent processes, consumers might not adopt the CDR if the benefits aren’t crystal clear. Demonstrating real-world, easy-to-understand use cases—like frictionless switching of service providers or personalised financial management—will be critical to driving uptake. Government investment in a mass media awareness campaign would help overcome some of the consumer apathy, but it seems unlikely to happen.Coordinating Multiple Sectors
Different industries have unique data standards, consumer expectations, and regulatory landscapes. Ensuring a consistent, intuitive consumer experience across diverse sectors is easier said than done. Strategic alignment among policymakers, regulators, and industry participants is necessary for a successful multi-sector rollout.Ongoing data quality issues
The ongoing data quality issues within the Data Holders continues to undermine the utility of the ecosystem. The majority of banking Data Holders have errors in their product data. Inconsistencies within account-level data remain a significant issue for ADRs.
The reset aims to address lingering issues and improve the CDR's practicality. While the expansion into new sectors is a significant goal, the focus on simplifying processes and reducing barriers to entry suggests a pragmatic approach to achieving widespread adoption.
The reset's success will depend on effective implementation and continued engagement with stakeholders. The long-term impact will be determined by how well these changes address the challenges faced during the initial rollout and in fostering a thriving ecosystem of data-driven services we are empowered to use.
What Australian Open Banking needs in 2025
In 2024, Australia faced challenges in its Open Banking system, which suffered from issues like data quality, slow adoption, high execution costs, and a complicated user experience. In response, Assistant Treasurer Stephen Jones announced a CDR reset aimed at addressing these problems, including streamlining the consent process and expanding CDR to non-bank lending data by early 2025.
Key developments included the introduction of Action Initiation, allowing consumers to authorise providers to act on their behalf, and significant growth in CDR engagement.
Recent rule changes aimed to enhance consumer experience by enabling bundled consents and extending trials for CDR-enabled products. Despite progress, further efforts are needed in 2025 to promote consumer education about open banking, which can significantly improve financial well-being.
Open Banking has spurred innovation in Australia's fintech sector, benefiting startups and small businesses with better access to tailored products and services. However, the expansion into sectors beyond finance, particularly telecommunications and energy, has faced hurdles, necessitating improved user experiences to facilitate future growth.
Overall, 2024 served as a reflective year for Australian open banking, laying the groundwork for a more impactful 2025 through enhanced consumer education, better user experiences, and broader market penetration.
Article link: What Australian Open Banking needs in 2025
97% of banks have open banking data issues for mortgages
A comprehensive analysis by Moneycatcha has revealed that 97% of Australian banks have data quality issues in their open banking data for home loans, according to new standards under the Consumer Data Right (CDR).
Out of 88 banks reviewed, 86 were found to have at least one data issue with home loan products, with a total of 3,101 data quality problems identified across 2,000 residential home loan products. The top five data quality issues were related to Loan-to-Value Ratio (LVR), Interest Rate, Repayment Type, Loan Purpose, and Loan Amount. Moneycatcha, which uses home loan product reference data for its mortgage broker tools, reported multiple issues with a significant number of products, including cases where data was incorrect, misplaced, or inconsistent with the information available on bank websites.
The fintech referred 1,431 products with data issues to the ACCC. Ruth Hatherley, the founder & CEO of Moneycatcha and a member of the Data Standards Advisory Committee, emphasised the importance of improving data management to unlock the full potential of open banking data. She highlighted that the Stryd Product Repository is designed to analyze and correct these data inconsistencies, helping brokers to provide accurate product and pricing advice to consumers.
The ACCC has identified data quality issues as a priority in enforcement, leading to penalties and remediation actions by some banks, including HSBC, which paid $33,000 in penalties. The CDR has faced challenges with data reporting and low consumer uptake, prompting the federal government to undertake a 'reset' of the open banking system.
The government has proposed three core changes to simplify the consent process, remove barriers for banks, and support innovation, including extending the trial period for CDR-enabled energy products. The CDR will expand to include non-bank lending in early 2025, with sharing obligations for product data beginning on July 13, 2026, and consumer data sharing obligations to follow in phases from November 9, 2026, to September 13, 2027, starting with the largest non-bank lenders.
Article link: 97% of banks have open banking data issues for mortgages
Joint bodies challenge ‘contradictory’ CDR expansion
In January 2025, major accounting bodies in Australia—CA ANZ, CPA Australia, and the Institute of Public Accountants—submitted a joint response to Treasury regarding the expansion of the CDR to include non-bank lenders (NBLs). While they welcomed this inclusion, they raised significant concerns about the competitive advantages large NBLs may have and the high costs associated with accreditation.
The bodies argued that the current thresholds for mandatory participation (over $10 billion in loans for large NBLs) could hinder consumer engagement and competition in the lending sector, which was not the intended outcome of the CDR expansion. They suggested that Treasury should collaborate with the industry to develop innovative data-sharing solutions for smaller players to alleviate these costs.
Article link: Joint bodies challenge ‘contradictory’ CDR expansion
CDR Representative Arrangements
Basiq Pty Ltd
INFOTRACK PTY LIMITED
Start date: 21/11/2024
Notes: InfoTrack is a technology company that provides reports, searches, certificates and integrated solutions for the property sector.
Website: https://www.infotrack.com.au/
Basiq Pty Ltd
PS REWARDS PTY LTD
Start date: 21/11/2024
Notes: Real-time cash back start-up.
Fiskil Pty Ltd
SARU TECHNOLOGIES PTY LTD - (PYLON)
Start date: 19 August 2024
Notes: Saru develops solar design and CRM systems.
Website: https://getpylon.com/au/
Basiq Pty Ltd
Zurich Australia Limited
Start date: 20/12/2024
Notes: Major general insurer.
Website: https://www.zurich.com.au/