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A massive change is about to hit our banking system

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In 2017, the Australian Government announced it would be introducing a policy known as Consumer Data Right (CDR). CDR, when it’s enacted, will give everyday Australians better access to their data and more control over how their data is shared with companies like banks, energy providers and telecommunications companies.

The new system will force companies to make it easy for their customers to share their data with rival companies. This shift should encourage more competition between companies, and, ideally, lead to better pricing and service for customers.

First stop: The banking sector

CDR will first be rolled out in the banking sector, where it’s known as ‘open banking’. From 1 July 2020, the big four banks will have to allow customers to share their credit and debit card, deposit account and transaction account data with other banks. Consumers will also be able to share their mortgage and personal loan data with rival lenders after 1 November 2020.

While the exact method of accessing and sharing data hasn’t been confirmed, the Office of the Australian Information Commissioner (OAIC) has said consumers will be able to “access particular data in a usable form and to direct a business to securely transfer that data to an accredited data recipient.” This will likely involve customers putting in a request with their bank.

Open banking is just the first stage in a set of legislative changes designed to give consumers access to personal data held by companies, and the ability to share that data with accredited third-party providers.

After the rollout in the banking sector, CDR will be introduced in the energy sector and then the telecommunications sector. It’s also expected to gradually spread to other industries and impact the rest of the economy.

What open banking and CDR mean for you

The potential consequences of the move to open data sharing are far-reaching for both businesses and consumers.

From a business perspective, service providers will have greater access to consumers’ data (once consumers grant permission) and will be able to create more personalised offers to try to lure them away from competitors. This should force companies to lift their game on pricing, service and innovation.
As a result, consumers will have more choice when shopping around for a product or service. Within the banking sector, CDR will make it easier for borrowers to see if a better deal on a mortgage or other loan is available at a rival lender. Open banking should also lead to more transparency in the home loan market and make it easier for borrowers to refinance to other lenders.


To sum up, the soon-to-be enacted open banking system could mean:

With this in mind, bank customers might start seeing positive changes in the second half of 2020, and then greater momentum in 2021.  Breaking up with the big four could be the best decision you’ve ever made.

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