Chapter 2: A Breakdown of the Inquiry into Future Directions for the Consumer Data Right - Final Report

CHAPTER TWO

Following on from last week's summary of Chapter One: Introduction to the Inquiry, this week, we examine Chapter Two of the report: Future Directions for the Consumer Data Right.

Despite sharing the title of this chapter with the report's title, Chapter Two delves deeper into the possibilities for the Consumer Data Right, and the ethos behind why getting the foundation right is so important.

The CDR was designed to provide a safe and efficient transfer of data at the consumer's request. This is significantly different from the concepts of consumer's owning their data, or consumers have absolute control and access to their data. As is often pointed out, the CDR differs from GDPR on these basic considerations. But that is a topic for a different exploration and not one that is explored in this report.

During the inquiry consideration was given to how the Consumer Data Right could expand in the following four directions:

1. Beyond data sharing, towards data-empowered consumers – Expanding the CDR’s functionality to improve consumers’ ability to use and benefit from their data so that it can transform the consumer experience

2. Beyond open banking, towards an economy-wide foundation – Growing the CDR throughout our economy purposefully and competitively so that it can become a foundation of Australia’s digital economy

3. Beyond a standalone system, towards an integrated data ecosystem – Connecting the CDR with other frameworks and systems so that it can generate a vibrant ecosystem to support a sustainable data future

4. Beyond Australia’s borders, towards international digital opportunities – Connecting with overseas data frameworks to promote cross-border consistency, connectivity and community.

Let's examine each of the four directions:

Direction 1: Beyond data sharing, towards data-empowered consumers

Consumer-focused from the beginning, direction 1 is designed to enable transformative consumer experiences within a rapidly changing landscape. The basis of these experiences should be simple, secure and digital. They will enable consumers to have meaningful engagements and benefit from their data in a digital economy.

In order to facilitate these outcomes, functionality within the digital economy must be expanded. Giving consumers the right to share their data is the first step. This step and required expansion of core functionality will enable consumers to access insights and recommendations based on their shared-data and enable them to use their data to create an action.

Potential actions and developments highlighted include:

? Streamlined switching – between products and services

? Action initiation – apply for, accept or manage new products and services, and

? Payment initiation – authorise, manage and facilitate payments securely.

The other section within Director 1 refers to consumer choice. The Consumer Data Right should be developed to meet the needs of ALL Australians inclusively. This includes vulnerable Australians and those with limited access and lower levels of digital and data literacy.

To meet these challenges, the Consumer Data Right must include:

? Clarity in data use – improving consumer understanding of the proposed use of their data so that their consents are more meaningful

? Control over data use – improving consumer ability to securely view and manage those consents in one location, and

? Data confidence – reinforcing consumer protections, including those with low data literacy or who are otherwise vulnerable, so that they can more confidently engage in the digital economy and, should they choose, use data to their advantage.

Direction 2: Beyond open banking, towards an economy-wide foundation

The Consumer Data Right was always intended to traverse sectors and potential use-cases. Open Banking was chosen to be the first cab off the rank for a variety of reasons. By broadening the sectors, this Right will strengthen the foundations of Australia's transforming Digital Economy. Mirroring the principles of innovation and competition, the Consumer Data Right will promote competitive dynamics within and across sectors by introducing additional sectors. By supporting all industry levels, from the micros to the majors, and by supporting the evolution of existing and introduction of new business models, this will ultimately give consumers a greater choice.

Chapter Two provides the following developments on Economy-Wide Foundations:

? Sector-by-sector growth – continuing to consider the inclusion of more sectors informed by sectoral assessments

? Enhancing competition between participants – aligning obligations for data holders and accredited persons that hold consumer data in all sectors, and

? Innovative growth – facilitating the use of the CDR to share data sets on the initiative of participants and not designated by the government, including innovative data sets that could be provided on a chargeable basis.

Direction 3: Beyond a standalone system, towards an integrated data ecosystem

For the CDR to encourage a vibrant and competitive environment, the regime must evolve past a standalone system. Direction 3 will promote a thriving data ecosystem where CDR participants of all sizes can offer new products and services.

Accredited participants of the CDR must value quality data and seek innovation to solve for the consumer-needs at the core of their involvement. To create both a competitive, creative and accessible environment and one that will encourage users and participants to the ecosystem, the report recommends three developments:

? Competitive support services – providing choice and specialised services to CDR participants supported by other elements of the digital economy

? Inclusion of trusted advisers – permitting consumers to pass their data to trusted advisers in the broader data and services ecosystem, such as accountants or financial advisers, and

? Balance and clarity in developing the CDR – ensuring that it is safe, efficient and effective in its implementation.

In addition, Direction 3 explores the need for licensing and accreditation within both infrastructure and data standard setting. In leveraging the Consumer Data Right infrastructure, the Australian Government will develop productivity-enhancing initiatives within the digital economy.

? Support interactions with other regulatory frameworks – informing and assisting the effectiveness of existing regimes

? Reduce regulatory burden – supporting efficient interactions in the regulatory ecosystem through the CDR recognising other regimes, and

? Connecting up the data economy – linking participants and initiatives of the data ecosystem, including digital identity services.

Direction 4: Beyond Australia’s borders, towards international digital opportunities

Its unique nature makes the Consumer Data Right innovative and one of the world's leading data frameworks. Global frameworks' focus will prove increasingly important for international data sharing, cross-borders products/services, and interoperability across technology platforms and systems.

? Cross-border consistency – supporting consistency in the setting of key standards and principles

? Cross-border connectivity – supporting international data portability and interoperability of regimes, and

? Australia as a proactive cross-border contributor – to the international community of countries with consumer-controlled data regimes.

As Open Banking advances its implementation, other jurisdictions are watching and reviewing their strategies and environments. The Australian model of an economy-wide data-sharing regime has encouraged other jurisdictions to expand their initial Open Banking implementations. The potential to develop a world-leading platform that will foster new territories for trade and partnerships, giving access to our market for market-leaders and exporting our best and brightest is the true potential for the Consumer Data Right.

In its current state, basic operations such as switching accounts and applying for new products such as bank accounts and mortgages, internal bank checks and opening and closing accounts have been explored, and case studies were created. The following are examples shown in Chapter 2 of the report.

As these case-studies and more like them emerge, they will create greater efficiency and consumer accessibility based on a robust and regulated environment. I personally cannot wait for the next wave of innovation to begin. The technologically-augmented products and services that will not only assist the businesses and consumers that utilise CDR but will enhance their experiences, increase their understanding and awareness, and above all else, improve the lives and both consumer and the entire digital economy of this nation.