Lisa Schutz is Managing Director of Verifier – a consumer driven data sharing platform that puts people in control of their data to get better service and better outcomes in financial services.
As an expert in data, the FSC’s Tech and Innovation Committee reached out to Lisa for insights on the Consumer Data Right (CDR), a framework launched by the government earlier this year to automate data transfer between organisations.
Here, Lisa gives an overview of the CDR, why ‘digital personhood’ matters, as well as how organisations being more active about their data sharing arrangements can lead to better consumer and business outcomes.
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Q: Why does the Consumer Data Right (CDR) exist?
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The CDR is a key outcome of the work of the Productivity Commission, who produced a report into data availability and use in the economy.
And one of its recommendations was that there needed to be mechanisms for more widespread data sharing, because of the potential economic value of that – both in terms of efficiency for the domestic economy, but also for export opportunities.
The vision is for it to be an economy-wide tool to support more data sharing of data that is personally identifiable.
It also has very heavy competition overtones, in the sense that the Harper Inquiry into competition and also the Murray Inquiry into financial services both talked about the value of data and transparency around outcomes to get better competition.
It’s important to also know that in parallel to this work, there is work going on in terms of draft legislation (as I'm talking) around Government data sharing.
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Q: You have a strong view that data rights is actually about ‘digital personhood’ and that the creation of a digital infrastructure will provide a frictionless experience. What is your view on the benefits of moving from a siloed approach to a cross-sector approach of data sharing in Australia?
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I think that many people will agree that if they had data from even just one other area of financial services, they would probably be able to offer better services to their customers.
If you think about insurance, bank data and wealth data and the fact that a person is consuming different products – and the different products have an impact on what else they should be doing or buying or using.
The point being is that we don't have an easy way to communicate our financial selves if you like. And if we could do that, then we should have access to more optimised, tailored services.
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Q: With Open Banking, the market generally seems slow to respond and reluctant to experiment. What is the advantage for industry players in moving to a mode of competition and innovation, rather than just compliance with CDR?
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I think as a company, you have to have a house view about how the future is going to look. Is it going to be data held in manufacturing-style silos? Or is it part of an eco-system?
If, and I suspect most people would agree, if you think you're going more toward the eco-system, and that you can add more value and be more competitive that way – then you're acknowledging data sharing.
So, if that's your future, then why on earth are you waiting? And why wouldn’t you want to compete on it?
If on the other hand, you feel that your business is going to run in a manufacturing-style silo, where you will share data with your customers on an ‘as needed’ basis and you're not going to try and innovate with data, then you would look at it as a compliance burden. And you would manage it from a compliance team perspective.
But if you do that, the risk is – and the learning from both UK and Australia is – you really need to set a team on compete and a team on comply. But if you try and get one team to do both – then compliance will always win.
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Q: You have been quoted as saying that industry should take an active approach in the design of their industry CDR solution or they could end up with another version of open banking. Why is it so important for, in particular the finance industry, to take an active and not passive approach to the CDR and the development of future ‘open finance’?
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The issue here about active versus passive, and why it matters for financial services, is if you think about the nature of CDR – it is an economy-wide regime. However, like all things, any scheme gets anchored to the first sector that attaches, and in this case, it was banking.
Your really have to ask yourselves, and in all the aspects of financial services that are not banking, do you look and operate the same way? And the answer is, of course you don't.
The risk is, if you don't get active about it, you're going to get a whole lot of default outcomes that relate much more to how banking gets done.
For instance, I'll give you an example in energy. Banking benefited from the fact that most people have online banking access, but they don't in energy. And that's been a huge piece of work to work-out how can you have people authenticating their energy account when they're not used to going online.
I would argue that for my super fund and my insurer, for instance, I don’t know how to logon to my accounts with them.
So that's just a very practical example of where you need to be active.
The other reason you want to be active is a lot of the time and cost for the industry goes into setting the data payload standards. Now it's obvious in each industry, and I know for super there's SuperStream, where you have clear formats already established and clear standards – you would want CDR to build on those.
The industry has to be very mindful of the fact that it has to educate the CDR data standards body and it needs to be active in that.
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FOR MORE INFORMATION:
Productivity Commission Data Availability and Use
Treasury - Review into Open Banking in Australia, Final Report (Farrell report)
Consumer Data Standards website
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The FSC’s Tech and Innovation Committee will continue to explore the sector’s biggest developments and news throughout 2021. Stay tuned!
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