2024 was a pivotal year for Australian open banking.
While Australia is seen as an open banking leader, its CDR regime has been criticised for issues including quality of data, slowness of adoption, cost of execution and cumbersome user experiences.
This led to Assistant Treasurer and Minister for Financial Services Stephen Jones announcing a CDR reset, which included reducing the issues driving costs and limiting take‑up, changing consent and operational rules to streamline the consent process for consumers, improving the experience and accessibility for small businesses; and expanding CDR to non‑bank lending data in early 2025.
Shortly after, Action Initiation – which allows a consumer to permit a service provider to initiate actions on their behalf – became law under the CDR.
Since, the ACCC has announced encouraging statistics. As of 15 October 2024, there were 99 banking and energy data holders in the CDR, 41 accredited data recipients, almost 390 million requests for consumer data in the six months to June 2024, and the number of consumers across the Australian economy using the CDR jumped from 226,000 to 300,000 from June to mid-October.
The most recent CDR rule changes came in November, aiming to make it easier for consumers to use the Consumer Data Right. This included allowing consents to be bundled, so consumers can provide multiple consents through one single action to enhance the experience and uptake; and supporting innovation by extending a trial of CDR‑enabled energy products to 24 months (up from 12 months) and to 2,000 customers (up from 1,000).
Despite significant strides taken in the right direction in 2024, more needs to be done in 2025 to ensure open banking continues to flourish and plans are converted into action and execution.
Increased consumer education
Open banking is a complex subject laden with technological jargon and acronyms like “application programming interfaces (APIs)” and “transactional data enrichment (TDE)”, which can be challenging to understand.
In the simplest of terms, it’s the process of consumers sharing data in a more immediate, secure and streamlined way, to enable their finance providers like banks, financial advisors and mortgage brokers to provide better and more tailored products and experiences.
At scale, this has the potential to enhance the financial well-being of Australians, but data sharing is something that is rightly held with trepidation and caution among consumers – so it’s the role of government, open banking providers and financial services in 2025 to help customers understand what open banking is and its benefits.
This is something the UK has done particularly well. As of July 2024, it hit the milestone of 10 million consumers and small businesses regularly benefiting from using open banking technology.
Supporting the startup and SMB ecosystem
Open banking has already played a significant role in fueling innovation in Australia’s fintech sector, including mortgage broking apps, personal finance management platforms, micro-investing tools and more. More, however, needs to be done.
Lauren Applegate – Director Customer Success & Marketing Envestnet I Yodlee
Beyond local data insights – global open banking providers have access to large, international data sets that allow Australian fintechs to expand into new markets and be informed when doing so. In 2025, startups with global ambition can look to open banking to help build their understanding of new markets, how customers behave in those regions, and what they demand.
Small businesses and franchises are also beginning to reap the benefits of open banking, directly or via CDR-enabled products and services. Open banking is helping SMBs to access more transparent and tailored business loans; faster onboarding of customers; and improved customer experiences from rich data insights. With improved experience and accessibility for small businesses being a key component of the government’s CDR reset, 2025 could be the year SMB usage of open banking has a significant spike.
Penetrating new sectors
The expansion of CDR into sectors beyond finance has had a few false starts and probably isn’t where it was intended to be at this stage in Australia’s open banking journey.
Its expansion into the telecommunications sector was paused in 2023, and its rollout into energy has been slow. The recent extension of the trial period for CDR‑enabled energy products to 24 is, however, a step in the right direction.
Hopefully, 2025 is the year when open banking successfully begins permeating into new markets – starting with the energy sector. However, perfecting its user experiences in existing use cases and creating greater ubiquity will be the key to seamless rollouts into new sectors in the future.
Exciting times
2024 has been a year of reflection for Australian open banking.
Criticisms have come its way, but plans have been put in place to iron out some of its kinks. As such, a perfect platform has been created to make 2025 the year open banking really makes its mark.
With increased consumer education, better user experiences, continued access to open banking among local startups and small businesses, and making its transition into new sectors stick – we’re in for something very exciting indeed.
- Lauren Applegate is ANZ director of customer success & marketing at Envestnet | Yodlee