On 1 August 2019, the Consumer Data Right Bill was passed by the Senate, effectively changing the Australian data landscape for the foreseeable future.
The legislation amendment was a push by Prime Minister Scott Morrison to exert pressure on the banking sector by increasing competition, empowering consumer use of their personal data and providing a legal framework for ‘Open Banking’.
The subsequent reforms will be delivered in stages, with the first major release of product and consumer data by financial institutions scheduled for February 2020.
How will Consumer Data Right affect Australian businesses?
The Consumer Data Right was primarily geared towards breaking the control of the Big 4 Banks on the banking sector through the implementation of Open Banking.
Open banking is a concept where consumers are given greater financial transparency through the control of their personal data, by being able to provide their financial information to trusted third parties via application programming interfaces (APIs).
This enables data portability, with an aim to drive innovation and the development of new technologies by companies that will provide consumers with more diverse finance options and data driven tools to manage their money.
Data portability prevents data from being stored in silos or closed platforms, which subjects consumers to ‘vendor lock-in’ and helped create the monopoly of the Big Banks we now see in the banking sector.
Inter-operability of data has been a hot topic for a number of years with the Consumer Data Right mirroring the UK’s open banking regulations and the implementation of the General Data Protection Regulation (GDPR) by the EU.
How businesses react to these new regulations and laws on their customer’s personal data is important in meeting consumer expectations of how businesses share their personal data and more importantly, how they protect it.
A key factor in efficient and trusted data sharing is data security and how businesses ensure safe and secure access to a consumer’s personal data.
A major concern for many industry insiders is how the Consumer Data Right will accelerate sharing of personal data, where one major data breach by a business may undermine consumer trust in the new regulations as well as the associated developed technologies.
This may however spark a greater focus on data security by businesses and create more opportunities in the cyber-security space. Issues such as consumer consent will also need to be tackled with the development of safeguards and raising consumer awareness of the Consumer Data Right and how it affects usage of their personal data.
So how does this affect privacy?
In a world where personal data is increasingly shared on multiple channels, privacy concerns are ever increasing.
One of the key reasons the bill was passed was the introduction of a ‘right to delete’ concession by Labor, which allowed consumers to purge their data once they ceased to be a customer of a business.
This was a critical addition in the protection of personal data sharing, enabling consumers to manage the use of their personal data by businesses. Additionally, with the advances in data analytics, the ability by businesses and organisations to create insights through consumer’s personal data has become a critical business tool.
The Consumer Data Right increases the value of consumer’s personal data, where retention of customers not only provides an income stream but also access to their data. Right now, data is a business’s greatest asset.
This puts a greater focus on minimising customer churn through improving customer experience. For the Big Banks, the Consumer Data Right might not be as detrimental as perceived. The Big Banks have been heavily investing in technology in the last few years, especially in machine learning and artificial intelligence. They can now leverage these developed capabilities to supply their customers with even more personalised and dynamic services, such as analysing customer profiles for access to conditional government rebates and targeting customer needs and behaviours in areas such as pricing or through discounts for other bank services. By utilising consumer data to its potential, the Consumer Data Right oddly enough, may in fact end up helping the Big Banks.
With government policies and new legislation like the Consumer Data Right, it is becoming increasingly important to navigate and understand how such changes can affect the business landscape in the long-term.
After the banking sector, the regulations are expected to be passed on to the telecommunications and utilities sectors where we may see further churn and the introduction of innovative new players harnessing new technology.
There are also concerns where the introduction of this legislative change may have wider impacts such as the access and sharing of patient health data by health networks and the massive implications that will come with that. The Consumer Data Right may have been formed to increase competition in sectors controlled by large monopolies; it may however have far-reaching consequences for data use in Australia.
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