The federal government has announced its plans to build upon open banking and expand the Consumer Data Right into the finance sector.
Personal datasets orbiting superannuation, general insurance and non-bank lending are on track to become exchangeable under the Consumer Data Right, with the federal government confirming the finance sector as its “next priority area to grow” in its roll-out of the data-sharing initiative.
Announced concurrently with Treasury’s confirmation that telecommunications will be the third sector that CDR expands into, the inclusion of the finance sector, which has been coined as “Open Finance”, is said to build on the “growing momentum” of Open Banking, first introduced in 2020.
Open Finance is intended to allow consumers to transfer their personal financial data to include financial products such as general insurance, superannuation, merchant acquiring and non-bank lending, in addition to banking.
According to Treasury, the underlying benefit of Open Finance is how it will spur “rapid product development” that in turn will provide consumers with “access to better deals and a more complete view of their finances”.
Treasury has expressed that this potential was highlighted during its Strategic Assessment consultation process, held between July and September last year.
Consultation on Open Finance is expected to commence soon, with the first phase intended to be completed before the end of 2022.
This first phase, according to Treasury, will involve the assessment and designation of key datasets within the superannuation and general insurance sectors, as well as with merchant acquiring and non-bank lending service providers.
A targeted dataset approach that prioritises and sequences assessments, designation and implementation of the CDR across these sectors is also intended to be adopted as a means to “maximise efficiency of implementation and scale-up of the CDR and support a rich data-ecosystem”.
Last month, in its official response to the Inquiry into Future Directions for the Consumer Data Right, the federal government revealed it was considering expanding into mortgages, stating that it had agreed to enable consumers and businesses to instruct third parties to initiate actions on their behalf following consent.
“Switching may be greatly streamlined by enabling electronic lodgement of applications in standardised forms by accredited persons on behalf of consumers and could be enabled by action initiation,” the future directions inquiry stated.
The inquiry added that if such a change were implemented, accredited persons may also be able to design services that offer to undertake these actions independently, or in combination with, data-sharing services.
Treasurer Josh Frydenberg said at the time: “The Morrison government is expanding the Consumer Data Right to make it easier for consumers and small businesses to undertake everyday tasks such as making payments, opening and closing accounts and applying for a home loan.”
Speaking of the change to Westpac’s in-house publication, Westpac Wire, Anthony Hughes, Westpac’s mortgages managing director said this step forward could be a game changer.
“Once we have a majority of the data available, it’ll make a really big difference to how quickly and easily we can help a customer with their mortgage and other needs,” Mr Hughes said.
“The first wave of digitisation was really about turning physical paper into digitised paper, but frankly it was still paper.
“But the true world of digital is when the paper goes away altogether and you’re automatically pulling verified data, obviously with the customer’s consent, from other sources.
“It might be data from the Australian Tax Office, or a credit bureau, or a customer’s banking transaction accounts – and, given that data’s verified, you don’t need to ask for any of those old school documents that we were required to ask for in the past.”