The Australian Banking Association (ABA) report has been at the forefront of recent discussions surrounding the Consumer Data Right (CDR), shaping perceptions and sparking debate.

However, beneath its surface lies a series of mistruths that demand closer scrutiny. The report has presented a number of statistics and comparisons that, upon deeper analysis, reveal significant inaccuracies and overlooked nuances.

In this article, I’ll aim to debunk the top 10 myths perpetuated by the ABA report, providing a clearer, more accurate picture of the CDR’s landscape and potential for Australians, which will, hopefully, pave the way for more informed discussions and decisions in the realm of data rights and financial technology.

Below are the top 10 myths from ABA’s recent report about the CDR:

1. ‘CDR customer uptake is 0.31%’

Credit assessments for the CDR, due to rules on data minimisation and privacy, mostly consist of once-off arrangements. The report overlooks this by grouping them with expired agreements and not reporting them for the current year. The average is 1.1 agreements per consumer. If this number were used, and excluding growth over the past year, would mean that 437,000 consumers have used the system since FY2020, which represents 1.6% of digital customers at the big four banks. This means the report has underreported customer uptake figures by 416%.

2. ‘All bank customers are able to access the CDR’

The report claims that only 0.31% of bank customers use the CDR, but it wrongfully includes all customers, not just digital ones. This is a misrepresentation, because only customers with a digital banking login can use the CDR. With data from the big four banks, the potential number of digital customers is 22.5 million, with an average of 42% being eligible for the CDR. On this basis, the report’s engaged customer statistic is understated by 230%.

3. The CDR is comparable to the UK’s Open Banking scheme

The ABA compares the CDR to the UK’s Open Banking scheme, but it ignores the fact that the CDR currently lacks payment initiation. Banks have delayed adding payments to the CDR, making comparisons to the UK and Brazil misleading. Including PayID engagement, this delay has diverted more than 18 million potential CDR users to the New Payments Platform (NPP), which leverages much of the research outcomes originally output for the CDR.

4. The report is representative of the whole ecosystem

The report is constrained entirely to the banking sector, entirely excluding the energy sector. Within energy, the sheer scale and speed of adoption is resulting in new challenges, such as sharing too many accounts (more than 500) in a single arrangement. Reporting entities do not currently report to the ACCC how many accounts are shared in each arrangement, so neither the banks nor the government has visibility on this.

“The Big Four banks collectively made a record profit of $165 billion. They spent just 0.51 per cent of this on CDR implementation.” – Stuart Low, CEO and Founder, Biza.io

5. The reported Recipient activity is accurate

Not all entities reported consistently. Not all sectors were included. The data does not include trusted advisers and once-off arrangements were excluded. This makes the figures reported on data recipients unreliable.

6. The CDR diverted funds from strategic priorities

The big four banks made a record $165 billion in profits during the reporting period. They spent $848 million on CDR implementation. This represents just 0.51 per cent of their net profits.

7. The CDR investment wasn’t used for any other purpose

In FY23, the big four banks invested $7.4 billion in technology, with only 1.8 per cent ($140 million) apparently dedicated to the CDR. This investment brought significant foundational improvements in areas like enhanced analytics, scam detection, the NPP fast-payment rails, and identity management. It’s likely that this spending also supported ongoing benefits for customers and reduced costs beyond the CDR deliverable.

8. The books weren’t cooked while reporting spend

The report shows total costs per financial year but appears to ignore accounting methods like amortisation. Assuming a five-year lifespan with zero residual value, the actual impact on net profit after tax (NPAT) for the big four in FY2023 is just $28 million – or 0.086 per cent – of total profit. Over time, the NPAT impact is $166 million – or 0.51 per cent – of total profits.

9. The banks support the potential of the Consumer Data Right

In May 2021, CBA launched a CDR pilot to show other banks’ balances in its app, and NAB was accredited for CDR in September 2021. During FY21 and FY22, the big four spent just $20 million on CDR activities beyond compliance. Despite promoting innovation, they have severely underinvested in the CDR, spending just $2.5 million per year each. The non-big four’s CDR spend is even lower.

10. Per consumer cost is uneconomical

Biza has enabled more than 30 Data Holder brands, including two of the three major energy companies, allowing 18 million Australians to share their data. The big four banks’ delivery cost of $7.70 per year per potential consumer is at least 2,000 per cent higher than Biza’s, highlighting inefficiency in project delivery or reporting deliberately skewed to an outcome.

As we keep pushing the CDR forward, it is crucial for stakeholders to rely on accurate, comprehensive data and to foster an environment of transparency and innovation.

The CDR represents a pivotal shift towards greater consumer control over their data and efficiency in financial services. Correctly understanding its current state and future potential will allow for more informed decisions that benefit all parties involved, from consumers to financial institutions.

Through continued scrutiny and dialogue, we can ensure that the CDR reaches its full potential, fostering a more dynamic and equitable financial landscape.

Stuart Low is chief executive and founder of CDR specialist Brisbane-based developer Biza.io.

Low was formerly Engineering Lead within the Data61 Data Standards Body, and prior to this served as Head of Innovation at Rabobank Australia & New Zealand.