The Consumer Data Right regime gives organisations the opportunity to become an accredited data recipient. They have a unique chance to gain a competitive edge – but they need to start the process now.
Since its implementation in 2019, the Consumer Data Right (CDR) regime has begun its transformation and digitisation of the Australian economy. Data holders from banks, energy and telecommunications companies will soon be required to transfer customer data if requested by their customers. In July 2021, Treasury released the Consumer Data Right Strategic Assessment Consultation Paper that explored the expansion of the CDR to whole range of sectors covering most of the economy. This will be rolled out over time. However, the opportunity to become an Accredited Data Recipient (ADR) is now available to all sectors.
The CDR will fundamentally change the business landscape in ways that many businesses do not yet appreciate. And there will be big rewards for those organisations that move first to become accredited to receive data.”
Becoming an Accredited Data Recipient
Becoming an ADR enables businesses to receive valuable consumer and product data from all data holders. This has started with banking information, will extend to energy and telecommunications, and then potentially to health, insurance, superannuation, loyalty programs and a range of others. The premise behind the scheme is to promote competition and empower consumers with the ability to easily compare, choose and securely switch between services. If functionality of the CDR is expanded to include 'action initiation' as has been recommended, this would enable accredited bodies to not only access consumer data but also undertake actions on a consumer's behalf. This would include initiating payments, opening and closing accounts and switching between providers.
It is inevitable that entities within the above sectors will be impacted by the CDR, as they will have to comply with their obligations as data holders as the scheme rolls out. However, organisations can take proactive steps now to go beyond mere compliance and strategically benefit from the regime.
Creation of 'life admin centres'
As the CDR expands across sectors, a consequence will be a rise in 'life admin centres'. These are essentially applications from which consumers will be able to monitor and manage all of their products and services from banking and insurance to energy and healthcare from a centralised portal.
For example, banks may be able to look after not only customers' finances but also their energy needs. With action initiation available, the bank would then be able to open new energy accounts and close existing ones on customers' behalf. Similarly, insurance companies may decide to organise house and car loans, while financial institutions might offer insurance bundles with their loans.
There will be increasing competition between organisations to become the preferred life admin centre for consumers before the market is saturated.
At the heart of these developments is a drive towards consumer satisfaction. In this new landscape, customer loyalty will be more difficult to maintain as it becomes easier for consumers to switch between providers. As a result, consumer choice will be of growing importance and existing businesses will have to innovate and evolve to out-compete their opponents.
Organisations who become ADRs have the opportunity to gain a competitive upper hand. They have the chance to become their customers' 'life admin' centre, and the trusted brand where all decisions are made.
Access to customer data and insights will allow for an improved and targeted customer service experience, which organisations can curate based on specific customer needs. As the CDR expands throughout the economy, it will allow for cross sector aggregation of services to be provided by businesses, allowing them to expand the scope of their own business ecosystem.
How to become an Accredited Data Recipient
Becoming an ADR takes a significant amount of time and energy to execute – the process can take up to 12 months. Organisations need to start the process now so that they can gain a competitive advantage.