After kicking off its Consumer Data Right scheme with Open Banking, the Morrisson government will extend the program to finance in a move that should make it easier for consumers to share information across general insurance, superannuation, merchant acquiring and non-bank lending service providers.
Open Finance will be the fourth sector to be covered by the data protability scheme, which allows companies to act on behalf of consumers when doing things like making payments and applications.
Banking was the inaugral sector to be a part of the CDR in 2020, followed by the energy sector. Treasury announced on Monday that telecomunications would be next, followed by finance.
Despite the reportedly slow takeup of Open Banking, Treasurer Josh Frydenberg said he was confident the move to Open Finance will build on the “success” of the initial rollout, and “allow consumers to compare and save across a greater range of products”.
In particular, spreading the CDR to finance will open the door for providers to create better and more beneficial apps for consumers, the Treasurer believes.
“Open Finance paves the way for the creation of new and innovative services such as personal finance and life administration apps to take the time, cost and complexity out of everyday tasks and big financial decisions for consumers,” he said.
The Treasurer gave the example of a budgeting app that – with a consumer’s consent – provide them with access to services based on data shared from their bank, energy or telco provider.
“This could help consumers achieve savings goals, get better deals and change their consumption behaviours to better suit their lifestyle and needs,” Frydenberg added.
“Combining Open Finance datasets with banking transaction data can also provide a consumer with a more holistic picture of their financial circumstances that is all held in the one place.”
The expansion of the CDR has been anything but smooth for the government.
When the door to Open Banking was first opened in mid-2020, the development sat on the periphery for advisers dealing with the onset of the pandemic and a host of regulatory changes. Some advisers were early adopters of the scheme’s benefits, but most were slow to see any tangible effect of the API technology behind it.
In November 2020 responsibility oversight of the CDR scheme was shifted from the Australian Competition and Consumer Commission to Treasury, after reports suggested the program was unclear and overly bearocratic.
At the time, only six entities had signed up for the Open Banking program after five months.
A total of $111 million was allocated to help facilitate a faster rollout of the CDR scheme in the 2021 budget.