Consumer Data Right - start small and scale up, says industry
The banking and payments industry has largely come out in favour of the Government's plan to introduce a Consumer Data Right (CDR) that would allow people to take their data with them as they switch providers.
A CDR, which has already been implemented in the banking sector in Australia and the European Union, could usher in the era of open banking, where account holders can share their banking data with third parties to access additional services.
That is widely acknowledged as a way to stimulate innovation. But several submissions on the Ministry of Business, Innovation and Employment's (MBIE) CDR discussion paper also have some reservations on the plan.
The banking sector and payment network providers such as Paymark worry that the specific benefits to consumers haven't been properly articulated and urge the government to start with a simple scheme to avoid substantial compliance costs that would be passed onto consumers.
"We are concerned that the analysis of a CDR's benefits is very high-level and lacking detail," the Bankers Association noted in its submission.
Where's the cost-benefit analysis?
"Additionally, little consideration has been given to how the benefits of CDR regimes generally would apply in the New Zealand context specifically. Similarly, the costs/risks of introducing a CDR are described very briefly without any real context or analysis," it added, urging MBIE to undertake more in-depth analysis.
The Data Economy Collective, which counts ASB, TSB, KiwiBank and Westpac as members, agreed that a CDR was needed, but advocated a "phased approach" to introduction.
"This ensures high-value and/or low-risk areas are tackled first to allow learning and value to be delivered, whilst still maintaining Consumer trust. This principle would ideally apply to
sector phasing, Consumer types, access types, etc".
Paymark, which runs the Eftpos network, shared those sentiments.
"We are wary of a more wide-ranging CDR that could delay ongoing work likely to improve the payments sector and/or impose costs on business that remain to be justified," it wrote in its submission.
It also discouraged a "lift and shift" of the Australian CDR. A Consumer Data Right had the potential to encourage more innovative payment services in New Zealand and tackle high payment fees in the industry. But implemented badly, it could cause more problems than it solved.
Business NZ mirrored the comments of many submitters that a CDR should only apply to observed data. That means if a bank, for instance, derives valuable insights from your data using software and algorithms, that info would not be included in the CDR.
"Regarding consumer data, we agree that only 'provided' or 'observed' data would be subject to the CDR, while 'derived' data should be excluded," wrote Business NZ.
Benefits for telecoms users
Trustpower, which sells electricity, gas and broadband services, saw potential in a CDR for the telecommunications industry.
"While we have already seen improvements in the electricity sector as a result of consumers having the ability to share their consumption data with those they trust, as well as reaping the benefits of a world-class switching process, the same cannot be said about the telecommunications sector," it noted in its submission.
The industry feedback suggests MBIE has a lot of work ahead of it to sort through the legal, privacy and technical implications of introducing a CDR.
Yesterday the Commonwealth Bank became the first of the 'big four' Aussie banks to become an accredited data recipient under the federal government's CDR scheme. It will be able to receive users' data from other banks and finance companies and apply it to its own services.
The CDR has been in place for the Australian banking system since July last year and is to be expanded to financial services in general and the energy sector. MBIE asked for submissions on its CDR discussion paper in August and has received 59 responses. It will now use the submissions to inform its advice to ministers.
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