A number of banks are struggling to meet the service availability requirements of the consumer data right, once again putting the business case for using open banking in question.
Data holders are required to have their systems available to service consumer data requests 99.5 per cent of the time. This means that when consumers try to share their CDR data with accredited data recipients, it should be successful at least 99.5 per cent of the time.
Of 113 data holders that reported performance data over the period from 15 March to 28 June, 21 failed to meet the availability benchmark.
Bank of Us reported 13.1 per cent availability, Newcastle Permanent Building Society 25 per cent, IMB Bank 25 per cent, Australian Unity Bank 77.1 per cent, Police Credit Union 87.2 per cent and ING Bank 87.8 per cent.
The others reported availability of 90 per cent or more but were still short of the benchmark. They include Commonwealth Bank, Bankwest and Citibank.
Banks that reported 100 per cent availability include AMP Bank, ANZ, Auswide Bank, Bendigo and Adelaide Bank, Beyond Bank, Great Southern Bank, Judo Bank, MyState Bank, St George, Suncorp and Macquarie Bank.
The open banking part of the CDR now boasts that it holds 99.18 per cent of household deposit information, but performance issues and the large number of gaps in available data have deterred some industry participants from using the system.
Nano co-founder and chief executive Andrew Walker said his company is using a screen-scraping service provided by illion to check loan applicants’ banking details.
Nano operates an end-to-end digital lending platform that promises home loan approvals in minutes. Walker said open banking was “not fit for purpose”.
“Maybe in six months we will look at it again,” he said.
A recent EY report on CDR said many banks have adopted a compliance attitude to open banking and have not given much consideration to the competitive advantages the system might offer.
Andrew Parton, Oceania partner in financial services technology consulting at EY, said: “The banks have to recognise that CDR is there for the consumer, to give them control over their financial and other data.
“If a bank is doing something with CDR that benefits the customer, it is going to benefit the bank. But if that customer benefit is provided by another service provider, there is plenty of evidence to show that customers will buy services from non-financial service companies.
“With the development of embedded finance, that trend will only continue.”
Parton said CDR also offers efficiency benefits for banks. Because it provides electronic access to data it removes manual data handling from processes like credit assessment and customer onboarding.
And once other sectors of the economy, including energy, telecommunications and broader financial markets, are art of the system banks will have the opportunity to cross-sell.
“What we are seeing is the emergence of the data economy and banks have to start identifying the competitive advantages CDR data offers them,” Parton says.