Opinion: Chalmers must address the enormous waste that is Australia’s current CDR

The CDR is a set of laws that allows consumers to safely share their data that businesses hold about them. Every time someone buys a product or signs up for a service, important data about them is generated. In the past, this would be owned exclusively by the provider of the service or product. With the CDR, consumers have control. They can decide if they want to share their data with an accredited CDR data recipient, and for how long.

The purpose of this switch is to give consumers the ability to share their data with a business that can use these insights to their benefit. The first use case of this is in banking, also known as Open Banking, and it offers great potential. We use the CDR across payments to deliver real-time, account-to-account transactions without fees, surcharges, clunky bank cards and risky passwords. Consumers are also realising the upsides in areas like mortgages, allowing brokers to accurately assess a person’s financial position in a fraction of the time and apply for relevant mortgage products with ease.

The other core benefit is data security. Businesses accredited for the CDR have jumped huge regulatory hurdles and undergo frequent audits by the ACCC. Any consumer data shared via the CDR is there solely to give consumers smarter choices; it cannot be used for any other purpose or sold to third parties. This is far more secure and policed than all the services we typically subscribe to and have resulted in widespread data breaches.

Unfortunately, in our recent national survey, two-thirds of Australians (68%) said they had never heard the term ‘Open Banking’ previously, versus around one-third (32%) who said they are familiar with it, and one in ten (9%) who said they know ‘a lot’ about Open Banking.

The wastefulness of this cannot be understated. Australia’s Open Banking infrastructure is world-leading but consumers largely continue to miss out on the financial benefits. They are also putting themselves at greater cybersecurity risk by reverting to unscrupulous data-sharing methods. This is a big concern when Australia is pouring billions into improved cybersecurity measures without proper use of existing capabilities. And let’s not forget the hugely prohibitive outlay cost for companies to join the CDR (our accreditation came in at around $ 1 million), resulting in crazy under-utilisation.

For years, the Treasury has been promising a widespread consumer education and marketing campaign around the CDR. Currently, the onus is entirely on CDR intermediaries like us to spread the word.

Promisingly, those consumers who are in the know think Open Banking is a game-changer. Three in ten Australians (31%) who are aware of Open Banking believe it is more secure than traditional banking, close to half (45%) believe that Open banking has the potential to improve their financial position, and almost half (43%) think Open Banking will create a fairer payments and banking system. And financial services are only the tip of the iceberg of how the CDR can be used.

Here’s what is needed:

• The government must inject more money into running and promoting the CDR and stop putting the brakes on consumer education.
• The CDR should be promoted as the gold standard for data security. It should be seen in the same light as the Heart Tick endorsement to reassure consumers. Until that happens and all players get on board, uptake will be slow.
• The government should mandate the use of CDR for data sharing – without this, consumers will stick to what is familiar (and riskier).
• A mandate would also encourage business uptake, which must be supported with a lower cost of entry.
• The government must accelerate the CDR’s phased rollout into other industries to help establish more use cases and spread awareness.

Allowing the CDR to operate in its current manner and pace is a recipe for government embarrassment and ongoing taxpayer waste. It is time to give this scheme the airtime it so deserves.