CDR reforms could add AUD $1.2 billion, study says

FinTech Australia and Lateral Economics have published modelling that finds proposed Consumer Data Right reforms would add AUD $1.2 billion a year to the economy by 2035. The report focuses on changes to consent, representative arrangements and bank exemptions.

The modelling examines three reforms Treasury consulted on: allowing third-party disclosure consent, simplifying the process for appointing nominated representatives, and rejecting a proposed de minimis exemption for smaller banks, building societies and credit unions. It concludes that the first two changes would reduce friction in the Consumer Data Right system, while avoiding the exemption would preserve broader access to consumer data across the banking sector.

Consumer Data Right (CDR) was legislated in 2019 and allows consumers to share their data with accredited services in a regulated manner. Industry has invested in products built on the regime, and nearly 1.2 million Australians are now using CDR, with 7 billion data requests recorded, according to the report.

The report projects user numbers would rise from about 1.2 million to more than 18 million by the middle of the next decade if the recommended reforms are adopted. It estimates that third-party disclosure consent would generate AUD $675 million in annual economic benefits by 2035, while nominated representative reform would contribute more than AUD $460 million, and not adopting the de minimis exemption would add AUD $100 million.

Consent changes

Under the proposed third-party disclosure consent model, consumers would be able to authorise the disclosure of their CDR data to a nominated third party for a specific purpose. The report argues this would simplify consent flows for users and businesses and address one of the main barriers to wider adoption.

FinTech Australia argues that friction in the regime has held back take-up despite stronger recent usage. It points to compliance complexity and a consumer experience that remains difficult, particularly for businesses trying to integrate CDR into their products and workflows.

"These solutions are by far the most impactful way of improving the current CDR regime and show that with the right policy settings it can deliver far more benefit to Australians," said Rehan D'Almeida, Chief Executive of FinTech Australia.

D'Almeida said the proposed consent reform would be the largest single source of additional economic gains in the modelling. He also linked the change to practical outcomes for consumers and businesses, such as switching and fraud reduction.

"Streamlining consent processes through a TPDC would make a huge impact in terms of take-up making up the bulk of the $1.2 billion in additional annual gains by 2035," he said. "It would also mean time saving and access to better rates for consumers, reduce friction for businesses, and reduce risk of fraud by avoiding screen scraping."

"There is currently uncertainty around how SMEs can appoint a nominated representative under the existing framework, and as a result, inconsistent processes are reducing small businesses' engagement with the CDR," D'Almeida said.

"Streamlining this would be a major win, especially for cloud accounting businesses who would be able to move millions of small businesses into the CDR environment making it easier for them to participate in the digital economy."

Small bank rule

The third area covered by the modelling is the de minimis rule, which would allow about 55 small Authorised Deposit-Taking Institutions to leave the regime. FinTech Australia opposes the proposal, arguing that it would reduce the usefulness of CDR by fragmenting the available data pool and weakening the value of services that rely on broad coverage.

The report estimates that not proceeding with the exemption would preserve AUD $100 million in annual economic value by 2035. More broadly, the concern is that partial participation can limit the effectiveness of open data systems, particularly where customers expect consistent access across providers.

Adoption question

The findings come as policymakers and industry continue to assess why CDR adoption has been slower than many expected in its early years. While usage has increased, the report suggests that procedural complexity and unclear implementation settings have reduced engagement, especially among small businesses and the firms that serve them.

For cloud accounting providers and other business software groups, nominated representative rules are a key operational issue because they determine how small and medium-sized enterprises can delegate access to data. The report says that a simpler digital appointment process, backed by clearer government guidance, would make it easier for those businesses to participate in the CDR system.

FinTech Australia represents more than 400 companies across the country's fintech sector. Its modelling with Lateral Economics sets out a case for regulatory changes that it argues would materially increase use of the Consumer Data Right, taking users to more than 18 million by the middle of the next decade.