Australian Open Banking falling short – Europe surging

The Australian Banking Association (ABA) has released findings from a strategic review conducted by Accenture on the roll-out of the Consumer Data Right (CDR) regime, the country’s opt-in Open Banking programme.

Launched in 2020 for major banks and 2021 for other banks, the CDR aimed to empower consumers with control over their data to foster competition and innovation. However, the review reveals underwhelming adoption and significant challenges.

Key Findings

Despite the investment of $1.5 billion by the banking industry and substantial government support, only 0.31% of bank customers utilized CDR by the end of 2023. More than half of the data-sharing arrangements were discontinued or lapsed within the same year.

The review highlights that high compliance costs disproportionately burden mid-tier and regional banks, negatively impacting competition.

These banks are forced to make difficult investment trade-offs, deprioritizing essential projects such as digital banking enhancements and scam prevention.

Impact on Competition

Contrary to its intended purpose, the CDR has made it more challenging for smaller banks to compete.

Michael Lawrence, CEO of the Customer Owned Banking Association (COBA), emphasized the need for a clear roadmap to ensure the CDR and Open Banking in general achieves its goal of enhancing competition.

Without addressing foundational issues, further implementation could erode competition and divert critical investments from customer-centric initiatives.

In contrast to the CDR, other digital banking innovations like mobile wallets and PayID have seen higher adoption rates.

Anna Bligh, CEO of ABA, noted that Australians have eagerly embraced these technologies, but the uptake of CDR remains low. Bligh called for a reassessment of the CDR framework to better meet customer needs and enhance competition.

The Path Forward

The strategic review suggests that the current CDR regime is not delivering its intended benefits to consumers or the banking sector. It recommends a new approach to reinvigorate the initiative.

This includes reducing compliance burdens for smaller banks and ensuring the CDR framework is aligned with the needs of all stakeholders.

European Open Banking growing

Meanwhile, a new report from Visa Consulting & Analytics on Open Banking in Europe reveals huge momentum has gathered and the regulatory backdrop has evolved.

We also see many examples of how Open Banking, working invisibly in the background, brings newfound levels of ease, speed and convenience to consumers and businesses alike.

The report states that, at the last count, Open Banking in Europe had reached 43 million people and achieved an annual compound growth rate of 53%.

There is also an observable incremental growth in the wider open banking ecosystem. By the end of 2023, the number of approved third party providers (TPPs) across Europe had reached 572, up from 204 towards the end of 2019.

Moreover, the frequency of API calls has drastically increased. In 2019, the total number of API calls for the year was approximately 1.3 billion. Fast forward to 2024, and there is an average of more than billion calls per month.


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