Open finance aims to allow consumers to compare a broader range of financial products that extend beyond the banking sector. These sectors include insurance, superannuation, merchant acquiring, and non-bank lending service providers. Treasury believes implementing open finance will allow consumers to be informed when making decisions about which services to use from these sectors. It said many consumers currently base their decisions on “rules of thumb” or shortcuts, such as choosing a well-known institution or an institution with which they have an existing banking arrangement.
“This can place non-banks at a competitive disadvantage, as consumers may be more likely to seek credit solutions from banks even if a better value deal is offered by a non-bank,” Treasury said in a newly released consultation paper [PDF]. Plans to start work on open finance were announced by Treasury last month alongside telecommunications being formally designated as the next sector to see the CDR. For the insurance sector specifically, home insurance and car insurance will be the top priority when introducing open finance, Treasury said at the time. Like previous CDR expansions, implementing open finance will involve a formal assessment and designation process.
As part of the consultation, Treasury would like to receive public input from non-bank lending providers about which datasets should fall within the CDR to spur the creation of new and innovative services. “Industry and stakeholder consultation at every step of the way is an important feature of our pathway to an economy-wide application of CDR. It not only supports practical implementation and explores benefits, it also ensures we build a high-value and robust data access system together,” said Jane Hume, Minister for Superannuation, Financial Services, and the Digital Economy. Treasury also wants input on which data holders might be suitable for designation under the CDR and how open finance might affect the privacy and regulatory burdens for these non-banking sectors. Treasury will be accepting consultation until mid-April. Australia’s CDR officially launched in July 2020 through an open-banking regime, which requires financial services providers to share customers’ data when requested by the customer. Meanwhile, from October 2022, energy product information will be shared so consumers can better compare energy plans, and from November 2022, energy consumers will be able to give consent to share their data about their own energy use and connection with a comparison service or fintech app.

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