Talk of concepts like CDR and Open Banking can be overwhelming and difficult to understand. This quick glance into Open Banking aims to clarify the benefits of Open Banking for Consumers.
A bit of History
What is Open Banking and where did it come from? The basic premise of Open Banking is to give power and control to the consumer through banks and lenders becoming more transparent with processes. Open Banking gives a consumer the ability to share their banking data in a secure way to accredited third-parties, while keeping control of their own data in a way they have never been able to before.
European fintechs have been leading the Open Banking charge with their Revised Payment Services Directive. PSD2 is boosting innovation and improving payment security all around Europe, especially in places like the UK, which has implemented Open Banking for the last three years.
For Australia, things look a little different. In August 2019, the Australian Government passed the Consumer Data Right (CDR) legislation, giving customers the control of their data. July 2020 saw the implementation of CDR in the Big 4 Banks: NAB, Commonwealth, Westpac and ANZ. February 2022 was the deadline for all other banks and lenders to comply with CDR; however, at the time of writing, the current laws are still being decided on. Open Banking is here in Australia to stay and soon will be part of everyday life.
This below snapshot encapsulates more of what the CDR is doing in the banking sector and other industry sectors.
Benefits of Open Banking for Consumers
Be In Control
With CDR, Open Banking gives power to the consumer. When using the simple, user friendly CDR service, you are asked to give consent for a provider to access your financial data. You are also able to manage what data you would like to share with the provider and can withdraw your consent at any time. For more information on your rights as a consumer, head to the CDR website.
Better Manage Your Finances
Open Banking can provide the tools to financial management companies to help you set realistic financial goals and better budget your finances. Lenders will be able to view your transactional data and recommend certain financial products and paths to take that benefit your current situation right now.
Experience Rapid Processing
No more going into a bank, filling out countless documents, and waiting weeks for a result. With your financial data and the touch of a button, banks and fintechs alike can verify your identity and assess your data through powerful APIs, meaning fast and accurate outcomes.
Find Products Tailored To You
Most current comparison services ask general questions, which can be confusing and inaccurate. Having your data at hand means banks and lenders are able to offer tailored products and improve access to better price comparisons. Open Banking removes the friction of switching banks or comparing products, making shopping around for the best deals so much easier.
Want to know more?
This exciting period in our financial world is only just beginning. To find out more about the CDR and what you need to do as a consumer, check out the official CDR website.