Issue 54: Paving the Way for Industry Standards: How the CDR is Transforming Income Verification

While the industry continues to focus on the CDR rest new opportunities for sharing data are appearing.

Paving the Way for Industry Standards: How the CDR is Transforming Income Verification

Income verification is transforming the Consumer Data Right (CDR) ecosystem, mainly through innovative tools like Finance Passport, simplifying and speeding up the process for lenders, mortgage brokers, and borrowers alike. This enhanced method not only accelerates income and expense verification but also reduces the risk of fraud for lenders, creating a valuable opportunity to establish a cohesive industry-wide standard.

Currently, however, the landscape remains fragmented, as lenders have varying Credit Policies to set themselves apart from competitors. This situation is especially evident in the residential mortgage sector, where lending over 80% relies on Lender's Mortgage Insurance (LMI), which already acts as a de facto standardised credit policy.

The widespread adoption of CDR has the potential to change this dynamic significantly. It would enable consumers to better assess their borrowing capacity while allowing lenders to streamline their Credit Policies and operational processes. If the CDR were to be a benchmark for income verification in the industry, we could see a more significant number of consumer offerings—especially those that allow individuals to understand their ability to get a loan from multiple lenders with minimal friction.

A parallel development in Open Banking innovation can be seen in Experian’s recent launch of Cashflow Score in the United States. Built on consumer-permissioned data, the solution provides lenders with more accurate insights into a borrower’s financial behaviour—such as income, expenses, and cash reserves—enabling them to make more informed lending decisions. Experian’s Cashflow Score is particularly valuable for people with limited or nonexistent credit files, as it draws on reliable transaction data instead of conventional credit histories. This approach underscores the growing momentum toward solutions that combine traditional credit data with real-time transactional information, aligning with the CDR’s vision of giving consumers control over their data for more inclusive financial services.

Another compelling example of the CDR’s broader application lies in the Australian Government’s initiative to enhance renter data protection using Digital ID and the CDR. This pilot program aims to simplify rental applications and reduce the amount of personal information shared by renters. The initiative involves collaboration between Digital ID providers, CDR-accredited data recipients, and real estate agents. Planned milestones include delivering a proof of concept by July and real-world testing of Digital ID and CDR for rental applications by October 2025. This highlights the potential of the CDR to boost data privacy and security while streamlining processes in entirely different sectors.

Ultimately, the greatest opportunity for the CDR appears to be the application of industry standards that benefit all participants—whether it’s verifying income for a loan, extending credit to consumers with little credit history, or protecting renters’ data. As Open Banking and consumer-permissioned data continue to reshape global financial services, solutions like Finance Passport and Experian’s Cashflow Score illustrate how a robust, standardised approach to data sharing can unlock faster approvals, reduce risk, and make financial services more accessible to all.

Link to Digital ID Systems: Expressions of interest: Protecting renters’ personal information with Digital ID and the Consumer Data Right

Article link: Launch of Experian’s Cashflow Score Signals New Era of Open Banking-Powered Lending