The consumer data right is coming. Within five years, it should have transformed commerce and simplified daily life. Yet most of us know little about it, and care perhaps even less.
The consumer data right (CDR) puts people in charge of the data businesses hold about them and does so in a simple way, at least for the people.
The first application of CDR was rolled out across the Big Four banks mid last year and will be rolled out across the balance of the banking sector mid this year. Open banking allows customers to direct their current bank to provide their raw transactional account data to another potential financial service provider so the latter can offer them a better service.
These changes will be utterly fundamental – for CDR goes to who owns the data. Your bank knows so much about you by operating your bank account. Historically, banks thought of this as THEIR data – information they collected about their customers. CDR says it is your data – the data of the people it is about – not the data of the bank that collects it.
Progress is slow and should be for two reasons. Firstly, we obedient Australians tend instinctively to look to government to set technological standards (the rails upon which CDR will run). However, governments mandating technologies rarely ends well. Technologies should be the choice of industry, and government is rightly pushing these choices back on industry. Government rules tend to lock certain technologies in place in deeply unhelpful ways. Secondly, the lesson of My Health Record is that data reforms need to be done right, the first time. Once someone authorises the transfer of data to one alternate energy provider and receives competing offers from five, trust in the system will be diminished.
Rolling this out in banking makes sense – but it has also clouded the message – for if people know of this at all, they tend to think it is limited to banking, whereas this will eventually be an economy-wide reform. After being rolled out across all of banking, CDR will be applied across energy, telecommunications, superannuation, and other sectors.
Energy is, to my mind, an even better example than banking. I pay too much for my electricity – for every time someone rings to offer me a better energy plan, I say no thanks. I am usually too busy to take such calls and even if I have time, I think it is going to be difficult to compare whatever I am being offered to what I am paying today.
But once CDR applies to the energy sector, I won’t have to answer annoying unsolicited phone calls to change providers. I will simply click on a button on a website or email and direct my energy usage data to be sent to my choice of new supplier. Importantly, the CDR regime will then enable that supplier to set out what I am paying today against what I will be paying if I switch providers. The problems of comparing apples and oranges, so prevalent particularly in mobile phone plans, should be resolved as the regime will reward comparability. If I prefer the new arrangements the competitor offers me, I will simply click another button, initiate the transaction, and change provider.
Once the recommendations of the recent report on the Future Directions for the CDR are implemented, for some contexts, CDR will literally be as easy as clicking on a few buttons. I won’t have to give my potential new provider lots of information about me. I won’t have to phone up and disconnect from my current provider. All I will have to do is click a button to accept the new offer and change suppliers.
Importantly, this will also deny my current provider the opportunity to reclaim me as a customer by offering a better deal when I call to cancel my contract. It will be too late. The cancellation will have happened. My current provider will be forced to treat me fairly upfront – or risk losing me.
Banks today routinely offer new customers better terms on home loans or other financial products than existing customers. E-commerce platforms in the US routinely offer consumers individualised prices on prospective purchases based on a raft of factors that, in sum, mean poorer consumers often pay more for their goods. Both practices seem deeply unfair.
Thirty years ago, most Australian businesses thought charging current customers more than new customers was unfair. Most businesses thought all customers should be offered the same prices. Today those standards of behaviour seem to have fallen away. In many contexts, CDR should reinstitute a commercial morality, a basic fairness, that modern business practices have set aside.
This is precisely the sort of foundational reform I don’t expect to see originate in government, and yet it is the brainchild of government, championed by Scott Morrison when Treasurer. Our current government and Prime Minister deserve great credit for these reforms and yet, quaintly, rarely speak of them. These reforms are, it is true, a work in progress, but they are work well worth doing, and work about which we all need to be aware.