How CDR is driving data innovation outside of the financial industry

When the right to consumer data (CDR) came into force, it was a victory for consumers in the banking and financial sector.

Consumers could control how their data was collected and used, and by whom, and the benefits include increased transparency and improved products based on new behavioral insights. The result is greater consumer control, convenience and choice, which has become a reality thanks to Open Banking.

Open Banking is for banks, right? Wrong. There is no reason for CDR to be confined to the banking sector.

Jill Berry, co-founder and CEO of Adatree

For organizations with enough vision, empowerment to collect and use data illuminates new solutions to old problems across a myriad of industries. We are just beginning to realize the expansion potential of CDR.

Beyond Open Banking

Currently, the use cases for CDR outside of the banking environment are limited. First, organizations need a bit of creativity to develop a use case based on the problems they want to solve for their customers.

Second, the regulatory process can still be seen as a barrier, although this is changing. Becoming regulated to access data used to take a year and now that period is closer to two months – even weeks if you go the route of new access models.

There are also use cases that reuse banking data when the purpose is outside the financial sector.

COVID Hotspot Alert, for example, is the first global COVID tracking and notification system created by my company. It uses AI combined with government health data and exposure sites to analyze banking data and identify consumer movements based on card transaction times and locations.

Activated with consumer permission, the system allows users to receive confidential notifications of potential COVID exposure if they made a purchase around the same time and place as a known case.

This COVID hotspot alert acts as an additional layer of communication for times when consumers are unable – or simply forget – to check in to a location or store. It is also relatively faster than traditional contact tracing because it uses a near real-time data set.

But the best bit? The consumer retains control: he can register or withdraw from the service at any time.

If they withdraw their consent, the service stops and their data retention preferences must be respected. This was created to facilitate a non-financial use case and to protect people through banking data.

Open Energy, Telcos, Finance and more

CDR has the potential to “open up” any industry where access to data can provide new insight into consumer behavior and product or service usage. It encourages transparency and competition, and two industries ripe for this are energy and telecommunications.

From October 2022, the CDR will be applied to the national electricity market, which covers all but Western Australia and the Northern Territory. This will start with our major energy retailers, followed by the smaller players, all of whom will need to make data sharing available as part of the CDR.

This means that consumers will be able to allow data about their energy consumption – when, where, volume and associated costs – to be made available to third parties. This will result in more insightful and accurate supplier comparisons, making it easier for consumers to switch to a better performing energy retailer and driving competition in the industry.

Curiously, just last month the government announced the third sector to be included in the CDR – telecommunications. Open Finance is expected to launch after Open Telco, which includes superannuation, non-bank lenders, merchant payments and general insurance.

I believe other industries will follow much faster because this is an economy-wide framework. Although specific data standards may change from industry to industry, the market model is easily adaptable.

Where CDR could go next

Other areas where I think CDR will make a real difference are in loyalty, where organizations can track consumer purchases in real time and offer rewards immediately to increase customer engagement. Or even for credit scores, where historical data on consumer behavior — rather than current financial status — can provide better context than traditional scoring methods.

I also anticipate new services arising from the greater availability of data. Switching as a service, for example, will save you from logging out of one service and signing up for another.

For a small fee and with the consumer’s permission, the service will be able to switch their account to the best price on the market and transparently manage all the administration that this entails.

Another great use case I can imagine for CDR would be a subscription management service that allows consumers to view all subscriptions in one place and evaluate their usage of each service to determine the value of keeping it . A service of this nature could also help manage trial periods, pauses, cancellations and renewals, as well as payment deadlines.

Using CDR for Open Banking is a good start and a useful demonstration of how this data can be applied to improve transparency and competition in an industry. However, other – and more beneficial – uses will arise when data-driven solutions help vulnerable, rural and disadvantaged Australians.

For example, organizations can help people struggling with debt and management issues by leveraging CDR to create budget plans they stick to. Those monitoring household budgets can also connect their banking data to services that find the lowest prices for groceries, gas and other essentials.

There are many ways to use CDR for good, and when used on a large scale, it will be the key to getting there.

Jill Berry is co-founder and CEO of Adatree an Australian fintech company at the forefront of consumer data rights (CDR). Adatree is Australia’s first accredited and active intermediary and has been a CDR pioneer since mid-2019. Previously, she helped found two new fully licensed banks, Tyro and Volt, and has over 10 years of product development experience in regulated environments.

Do you know more? Contact James Riley by email.

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