But it is not only about sharing information. There are also plans to move to something called “action initiation”. This means giving users the ability to authorise a third party – a fintech – to use their personal data to seek out better deals on their behalf and then switch them to more competitive products. The parliament will this week vote on “action initiation”, amid recent pushback from the banks.

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Scam warnings

The banks’ gripes with the consumer data right have centred on its low usage, high cost – especially for smaller lenders – and what they say are security risks. The Australian Banking Association has commissioned research that found only 0.31 per cent of customers were using the CDR, while arguing “action initiation” would make it harder to detect scams because it would effectively allow unregulated third parties into the payment system. Importantly, these third parties would need to be authorised by the Australian Competition and Consumer Commission.

Fintechs have hit back by accusing banks of trying to undermine a scheme that could unleash competitors against banks, while also pointing out the regime is still in its infancy.

The stoush has also divided experts.

Managing director of payments consulting firm The Initiatives Group, Lance Blockley, says banks raise a legitimate issue when they say the CDR system has not been widely used by consumers, and says the CDR’s progress so far has been a case of “baby steps”. “In terms of further investment, where will be the return on investment? Is the benefit really worth the costs? Because so far it has not lived up to the hype,” he says.

The consumer data right is ‘the clean water and sewage system for the digital economy’.

UNSW Law Scientia Professor Ross Buckley

On scams risk, he says the banks have a legitimate point about risks of allowing firms to initiate payments on behalf of customers – even if these fintechs are vetted by the competition watchdog.

Yet others maintain a system for safe data-sharing will eventually provide major benefits for consumers.

UNSW Law Scientia Professor Ross Buckley predicts the consumer data right will ultimately be a hugely useful piece of infrastructure for the digital economy. But he says that for this potential to be fulfilled, a move to “action initiation” is vital.

Buckley draws a parallel between the consumer data right and water or sanitation systems – unglamorous infrastructure that made modern cities livable.

“It’s the clean water and sewage system for the digital economy,” he says.

Buckley says data is already critical for sectors including banking, health, education and transport, and the CDR provides a safe and regulated way for it to be shared across sectors. Action initiation could allow the system to become truly convenient for consumers, as it could basically allow customers to switch services, such as energy providers, through fewer clicks.

“I think the real reason there hasn’t been more take-up is the lack of action initiation,” Buckley says.

Jones has sought the middle ground, saying the government remains committed to the CDR, but it wants to see more practical uses. He singled out consumer finance and lending, energy switching, and accounting services for small businesses.

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At the very least, the scheme has provided yet another reminder of the difficulties of encouraging people to switch banks. Indeed, it’s sometimes said Australians are more likely to leave their partner than their bank – a situation that dulls competition.

Jefferies analyst Matt Wilson says while younger consumers may be more willing to switch banks, the CDR experiment has reinforced that many customers are “sticky” when it comes to their bank.

“Inertia is hard to break,” Wilson says. “It’s fair to say it has not delivered what it hoped to deliver in terms of making banking more fluid.”

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