The first tranche of the Consumer Data Right (CDR) will officially be launched on 1 July 2020 and it will require the big four banks -- ANZ, the Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), and Westpac -- to share product reference data with accredited data recipients.
Consumer data relating to credit and debit cards, deposit accounts, and transaction accounts must be made available from the start of this coming financial year; while consumer data relating to mortgage and personal loan data must be able to be shared from November 1.
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The mandate touted as allowing individuals to "own" their data by granting them open access to their banking, energy, phone, and internet transactions, as well as the right to control who can have it and who can use it has been looming for years; but chair of the CDR's Data Standards Body, Andrew Stevens, has warned against dismissing the mammoth task the banks have had in rearchitecting their systems.
"I can guarantee you that there's no organisation in this room that has architected the storage of their consumer data to enable easy access in the same timeframe as people will use when they activate their account with you," Stevens said, speaking at the Gartner Data & Analytics Summit in Sydney on Monday.
"In the banking context, the transfer has to occur within the normal realm of your internet banking response time, which is two seconds … no one has architected their systems to do that."
According to Stevens, the reality is that a lot of the complexity has been overcoming the previous architecture design constraints in order to provide the required level of responsiveness.
"I think for the incumbent banks, they probably have the hardest road of all," added Westpac chief data officer Jamie Twiss.
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Speaking alongside Stevens, Twiss offered up advice on how to prepare for the CDR before it reaches other industries.
"It is coming to you almost regardless of where you are. I think getting your head around it early, both in terms of the technical implications of it, whether that's as a holder or recipient is really important, because depending on the state of your systems, the level of your ambition, what you're doing today, it's a significant change," he said.
"It'll be a challenge for everybody and I think if you rely on some other form of data transmission, whether it's screen scraping or mailing statements or something else, you should expect that over time that will either become impractical from a regulatory point of view, or consumers will just start to reject it."
Twiss is expecting a level of disruption to every industry off the back of the CDR.
"I think what we'll see is lower friction in moving data around the economy -- it will of course ultimately benefit the consumer, but it will disrupt industries along the way and there will be winners and losers," Twiss said.
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Twiss expects there to be two main categories of use cases. He said in the first couple of years, the main focus will be fairly straightforward comparisons.
"And then, obviously, there's a competitive implication around that, which is you can take somebody's data and look at what they're getting, what they're paying for it, and offer to do better," he said.
"Just the equivalent of the old, 'bring in your phone bill and we'll see if we can be your current long distance provider'-type pitch, which I think will be a whole category of things that are around that."
This also ties into onboarding, with a customer simply bringing their account information over from another incumbent.
The second category is deriving insights from the data.
"I think everybody's still finding their way a little bit -- looking at insights that you can derive off the back of people's financial product usage, and particularly, their transaction history," Twiss said.
"So right now, I think all the banks are thinking about, well, how can I take your -- in our case, Westpac transactions, and give you some insights as to how you spend your money? What can you possibly do differently?"
With the CDR in place he said it will be possible for the banks or third parties to do that across all of a customer's bank accounts. He added Westpac is prioritising both.
When asked how Westpac plans to leverage its trust, Twiss touched on the banks becoming data recipients, not just data holders.
"Banks score poorly with trust in some ways, but as you know, they score well on trust in terms of is my money safe, is my data safe," he continued.
"That puts us in a position where we have the ability, and arguably a social obligation, to become a data recipient as well, and be that first point of call for that data aggregation."
According to Twiss, Westpac also wants other organisations to build up a level of trust similar to what the big four have.
"We'd like other organisations to be trusted up to the level of their kind of capability, security, and privacy as well. So while we think we're in a good position to play that data recipient, that role as well, we'd like to see other recipients that have the appropriate privacy and security place, be in that position as well," he said.
"I think that will create more innovation across the economy."