CDR reforms would add $1.2 billion annually to economy, new report
A new report from Lateral Economics and FinTech Australia shows the benefits of proposed reforms for nominated representatives and third-party disclosure in reducing friction and improving CDR adoption.
SYDNEY, April 28: Reforms to the Consumer Data Right regime including enabling third party disclosure could rapidly increase uptake and add $1.2 billion to the economy annually by 2035, a new report by FinTech Australia and Lateral Economics has found.
The report, Economic Modelling of Consumer Data Right Reforms, has modelled the economic impact of three key reforms proposed for the CDR which were the subject of a targeted consultation by Treasury last year.
Since the CDR was legislated in 2019, industry has made substantial investment in developing products reliant on CDR, and recent data indicate that uptake is accelerating, with nearly 1.2 million Australians benefiting from CDR and 7 billion data requests.
The report considered three key reforms proposed by Treasury:
Introducing third-party disclosure consent (TPDC): This would allow consumers to authorise the disclosure of their CDR data to a nominated third party for a specified purpose.
Streamlining nominated representative arrangements to a simple digital appointment process with clear guidelines from the Government.
An exemption for small banks, building societies, and credit unions: Known as the de minimis rule, this would allow approximately 55 small Authorised Deposit Taking Institutes (ADIs) to exit the regime lowering their compliance burden but undermining the benefits of CDR by fragmenting available data.
The report modelled the effects of not proceeding with this rule which is opposed by industry stakeholders including FinTech Australia.
FinTech Australia CEO Rehan D’Almeida says the new economic modelling recommended introducing TPDC and streamlining nominated representative arrangements would solve several key issues with the CDR. D’Almeida also opposed the de minimis exemption.
The modelling shows that following FinTech Australia’s recommendations will lead to CDR users increasing from around 1.2 million to over 18 million by the middle of the next decade.
“These solutions are by far the most impactful way of improving the current CDR regime and show that with the right policy settings it can deliver far more benefit to Australians,” Rehan D'Almeida, CEO of FinTech Australia said.
While fintechs continue to drive strong innovation across the CDR ecosystem, the regime has not yet reached its full potential. Persistent friction points, including compliance complexity and a suboptimal consumer experience, are constraining adoption and limiting the growth of high-value use cases.
The report estimated the benefits of the proposed reforms per annum by 2035 would be:
TPDC: $675 million
Nominated representative reform: Over $460 million
Not adopting the de minimis exemption: $100 million
“Streamlining consent processes through a TPDC would make a huge impact in terms of take-up making up the bulk of the $1.2 billion in additional annual gains by 2035,” D’Almeida said.
“It would also mean time saving and access to better rates for consumers, reduce friction for businesses, and reduce risk of fraud by avoiding screen scraping.
“There is currently uncertainty around how SMEs can appoint a nominated representative under the existing framework, and as a result, inconsistent processes are reducing small businesses’ engagement with the CDR.
“Streamlining this would be a major win, especially for cloud accounting businesses who would be able to move millions of small businesses into the CDR environment making it easier for them to participate in the digital economy.”
About FinTech Australia
FinTech Australia is the not-for-profit peak industry body for the Australian fintech sector, representing more than 400 companies nationwide. Its vision is to make Australia the leading market for fintech innovation and investment by working with government, industry and the fintech community to create a supportive environment for growth and global competitiveness.
