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Australia

Open Banking

Open Data

The Australian Consumer Data Standard is transforming the economy in the world’s sixth-largest country.

According to the Australian Communications and Media Authority (ACMA), 99% of Australian adults have access to the internet, 91% of which can access the internet from home and 93% use mobile devices. The use of financial services online is on the rise.

Third-Party Providers (TPPs)¬†need to be accredited. New ways to participate in Open Banking are being introduced to grow the ecosystem quickly and safely. Currently, there are¬†two levels of accreditation¬†available to participants ‚Äď unrestricted or sponsored. The unrestricted accreditation is the highest level of accreditation¬†in the CDR. A person or entity accredited at the unrestricted level may collect CDR data from data holders, at the request and consent of the consumer, and provide goods or services to the CDR consumer either directly or by using the services of an outsourced service provider. In addition, they can sponsor another accredited person in the CDR regime in a sponsorship arrangement and/or enter into a CDR representative arrangement.¬†

The sponsored accreditation can only be achieved with a sponsor, who collects CDR data and provides goods or services to CDR consumers. CDR data is specific information for the relevant designated sector and varies by sector. The sponsored entities must only collect CDR data through the sponsor, other accredited person or the sponsor’s outsourced service provider and must not engage an outsourced service provider to collect data or engage a CDR representative. This scheme is hoped to result in more flexible outsourcing arrangements, the appointment by accredited entities of representatives to provide CDR services, the sharing of data with trusted advisors, and the sharing of insights with unaccredited entities. 

Australia’s¬†CDR inquiry 2020¬†highlighted that a lack of interoperability in standards means inconvenience and inefficiencies for both consumers and businesses, and the longer this is left unaddressed, the harder it will be to create new standards later. The enquiry also warned that fragmented approaches will lead to missed opportunities to align standards with economy-wide and international standards for digital products and services. Therefore, Australia¬†aims to work beyond its borders and seeks opportunities to convene an international forum for policymakers considering, designing, implementing and maintaining consumer-controlled data portability regimes. Australia has been looking into establishing a quarterly dialogue with international policy bodies with the United Kingdom, New Zealand, India and Singapore. Also, currently,¬†New Zealand is looking to establish a Consumer Data Right¬†framework¬†similar to Australia, with a Bill to be introduced to¬†the Parliament in late 2022.¬†

The Consumer Data Right is developed in such a way that encourages the use of interoperable authentication solutions and minimum assurance standard for authentication based on compatible international standards. 

The Open Banking ecosystem is targeted to benefit consumers and small and midsize business finance.

The Consumer Data Standards are expected to benefit particularly vulnerable populations with needs that can be met with Open Banking-enabled products in Australia. Data61, which has been appointed as the Consumer Data Standards (CDS) team to develop standards for the Consumer Data Right (CDR), has conducted user experience studies focusing on vulnerable consumers to allow critical issues to be surfaced early. Addressing the needs of vulnerable users and considering any aversions they may have to data sharing is expected to greatly assist the widespread adoption of the CDR.

Along with Indigenous partners,¬†the Reserve Bank of Australi, Te PŇętea Matua (Reserve Bank of New Zealand) and the Bank of Canada have formed a voluntary network to foster ongoing dialogue and raise awareness of¬†Indigenous economic and financial issues.¬†They conduct research for and with Indigenous Peoples on economic issues, build cultural awareness, strengthen engagement practices with Indigenous groups and communities and support economic and financial education for and about Indigenous Peoples.

According to The Global Findex Database, 99% of Australians had bank accounts in 2021, leaving only 1% unbanked.

Initially, Open Banking in Australia was created to enable the sharing of data by customers but not to initiate payments; however, the recommendation to extend this functionality has been made, moving it beyond data sharing. 

The Consumer Data Standards are expected to benefit particularly vulnerable populations with needs that can be met with Open Banking-enabled products in Australia. Data61 has been appointed as the Consumer Data Standards (CDS) team to develop standards for the Consumer Data Right (CDR). They have conducted user experience studies focusing on vulnerable consumers to allow critical issues to be surfaced early. Addressing the needs of vulnerable users, and considering any aversions they may have to data sharing, is expected to greatly assist the widespread adoption of the CDR.

By the end of 2021, 16 banks, with 16 additional brands, who represent 85% of Australia’s household deposits, were active as data holders. Thirteen data recipients had been accredited and were active, including Fintechs, accounting platforms, and comparison providers. Two banks were accredited to receive customers’ data from other banks, at their customers’ request. More entities go through the ongoing accreditation process. 

The commencement of Open Banking has spurred new combinations between Fintechs and banks, credit unions and comparison providers to leverage experience and expertise. According to Finicity access to permissioned data has generated a new wave of next-gen financial apps and services, allowing more consumers and SMEs to participate in the traditional financial system. Furthermore, they imply that the tools for credit decisioning, payments, financial management and access to capital are becoming smarter and more inclusive than before. The Open Banking ecosystem is targetted to benefit consumers and small and midsize business finance.

EY Fintech Australia Census 2021 

found that two-thirds of Fintech organisations were struggling to find suitable talent, such as employees with engineering and software skills, product management and data engineering/data science. in Australia, and almost three-quarters stressed the importance of skilled migration visas in overcoming this burgeoning problem. An October 2021 review of Australia’s CDR progress, found that a quarter of organisations said the challenges associated with skills shortages were hindering the development of products and services. This challenge has been compounded by immigration and employee mobility barriers during the COVID-19 pandemic.

The Australian standards body offers a detailed¬†¬†support portal¬†with guides on many relevant topics, such as testing, including for example, Conformance Test Suite¬†guidance¬†and¬†version history and scenarios, ¬†¬†test approach for new and existing data holders and data recipientson-boarding process,¬†on-boarding process¬†and¬†testing documentation,¬†implementation¬†guide, ¬†registers, such as,¬†Data Holder Endpoint Configuration on the CDR Register,¬†¬†CDR Register Client Authentication¬†and¬†Certificate Validation,¬†as well as¬†production guides¬†helping to¬†find a Consumer Data Right Provider,¬†manage organisation’s access to CDR Support Portal Tickets¬†and¬†sign up to the CDR Support Portal¬†and¬†rules,¬†for example,¬†response to queries,¬†offline Customer Guidance¬†and¬†‚Äėwhite labelling‚Äô products/services.