Most businesses in the financial services industry have plans to use open banking data to develop new products and services. But they find the Consumer Data Right overly complex, the cost of participation high and some technology partners not up to speed.
Open banking fintech Frollo surveyed finance industry professionals and, based on 131 responses, found that 92 per cent of respondents plan to use CDR data.
Currently there are around 75 ADIs accredited as data holders (with around 40 of them “active”) and around 19 data recipients.
In its report, The State of Open Banking 2021, Frollo said the small number of businesses actually using the data was due to several factors.
“Putting the required systems and processes in place is a lot of work, especially as the system continues to evolve. Treasury has continued to tweak the model, recently announcing a range of new access models,” it said.
In October, the government amended the CDR rules, introducing a tiered accreditation system that includes sponsored accreditation, a CDR representative model, access by trusted professional advisers and an access model called “CDR insight”.
The aim is to encourage greater participation in the scheme but Frollo found industry participants are still confused by the changes. It said one in three survey respondents have no idea which of the models they would consider for their business.
Sixty-seven per cent of data holders said their biggest challenge was the complexity and uncertainty of the rules, followed by high costs and problems with technology partners.
The most popular use case is lending, with 59 per cent saying they planned to use open banking data for verification of income and expenses.
Money management tools (personal financial management) and multi-bank aggregation are also popular.
On the data side, Frollo said data coming through its CDR gateway indicated most data holders are offering near-real time data with high levels of reliability. Beyond Bank, Up, 86 400 and P&N Bank provided the fastest response times. Macquarie Bank, MyState Bank and Qantas Money were the slowest.
Respondents want to see open banking expanded to include payments and product switching.