Here’s a philosophical question for the times: If a national economy-wide digital economy platform initiative is suffering a slow, tortured death – and no one notices – should it be quietly and quickly euthanised?
This is the question being contemplated – but not publicly voiced – about the stalled Open Banking and data economy platform initiative launched five years ago amid some fanfare by the Morrison government.
The initiative was all about leveraging the Consumer Data Right (CDR) legislative, regulatory and standards framework, enacted in 2019 and designed to give consumers more control over their personal data.
Back then, the goal of Open Banking and the CDR-enabled trusted data-commerce services platform in general was to infect Australian consumers, businesses, and the economy with a good dose of much needed 21st century digital dynamism and competition.
It was – and still could be – a bold and strategic digital infrastructure ambition for the productivity and growth-constrained national economy. But confidence in its future viability, even among the true believers is evaporating.
The CDR-enabled Open Banking and data commerce project was a world’s first for Australia at the time. While other jurisdictions – like the United Kingdom – had embarked on Open Banking as early as 2017, Australia’s CDR-enabled strategic vision was always intended to go multi-sector, and then economy-wide.
But as is so often seen in Australia, when it comes to technology vision, strategy and execution, we lose heart quickly. The resistance to change and fear of complexity is high and any dynamism is fleeting, and too easily smothered by the recommendations and advice of the status quo stalwarts.
Under the CDR, consumers have the right to securely access and share their data with trusted third parties like banks, insurance and energy companies and other service providers.
For consumers that gave their consent, the CDR legislation represented the birth of a new era of choice and value for data-driven products and services tailored to their needs in sophisticated but not creepy ways.
It was expected that over several years of a phased sector by sector rollout, starting with banking in July 2019 and energy in October 2022, consumers could own, know, and transfer their data and use the new secure digital infrastructure to shop around, switch service providers, take out a loan, apply for a new mortgage and seamlessly manage a diverse range of financial and other significant life decisions.
The economic and innovation spillovers were predicted to be great.
The country’s fledgling and enthusiastic FinTech startup sector was poised to thrive under the Open Banking and secure data sharing rules. The big data holders the FinTechs were competing or collaborating with – the big banks, energy, insurance companies and telcos – who have long been too cosy and complacent to work harder for customer business – were being forced to kick their service and innovation mindsets up a few notches.
It was billed to be a first-mover advantage for Australia, to set us on a path to a brave new world of CDR-enabled competition, friction-free service delivery and new high-growth and strategic data-driven industries in the global knowledge economy.
None of that ambition has produced measurable outcomes, and the anticipated economic and innovation dynamism is stuck on “Meh”. Most insiders say the country’s CDR-digital and data economy movement is in a doom loop.
The big banks are publicly crying foul at the massive costs – estimated above $1 billion to date – of managing CDR compliance, privacy and system complexity. Consumers either don’t know the CDR-enabled services exist or don’t see the benefit of using them.
And the Albanese Labor government has paused the CDR-platform rollout to insurance and telecommunications until a review is completed at the end of this year.
The CDR initiative has four distinct entities represented – Treasury, which is the lead agency; the ACCC, the Office of the Australian Information Commissioner (OAIC) and the Data Standards Chair.
But real authority for CDR under the Labor government resides with the Assistant Treasurer and Minister for Financial Services, Stephen Jones.
The government-initiated CDR-pause was announced months ago. And this is why many data economy experts and insiders were curious why Deloitte released a 66-page report: Consumer Data Revolution: Empowering Australia’s Future just a couple of weeks ago.
More eyebrows were raised by the fact that the Commonwealth Bank, Australia’s largest, but the one who appeared the least active in the CDR-arena, was the sponsor of this report.
The report summarises Australia’s mixed success with the CDR initiative and lays out an alternative path for more decisive and sustainable success in terms of consumer and economic benefit.
For Deloitte and its chief sponsor, the suggested path leads away from banking and energy giants shouldering the bulk of the cost and complexity of the CDR and toward other private and public businesses and agencies.
The report frames this as an ‘expansion’ of the CDR, rather than deepening the scope and quality of data in banking and energy.
Upon reading the report, I thought perhaps a better title could have been Australia’s Consumer Data Revolution: We Can’t Get There From Here!
Effectively, it implicitly, though not overtly argues that starting the CDR-enabled digital economy roll-out with just the banks and energy sectors was the wrong approach, as they collectively only hold a tiny portion – 4 per cent – of the nation’s total consumer data.
“Consumers leave a large data footprint in the economy, estimated at close to 48,000 petabytes in 2023. This is equivalent to every Australian taking and storing around 2,670 photos each day for a year on their phones (assuming a typical smartphone photo takes up around 2MB storage). Consumer data is regularly shared between some businesses but mostly not within the CDR framework.
“Banking and energy accounts for only 4 per cent of total consumer data in Australia. This indicates there’s potentially more value to be captured by expanding the CDR, rather than deepening scope in banking and energy.”
Because cross-sector data sharing is crucial to all participants who want to play in the new high value data economy, the report infers it would have been much smarter to focus on the public and private sectors that hold the most consumer and citizen data.
And who are these giant data holders? The software and information services businesses and governments, specifically in public administration and safety. The banks may be waking up to the fact that the real opportunities for leveraging CDR-enabled data and infrastructure is in being a data recipient of other company and organisational data.
So, what should the focus of the CDR rollout be, according to Deloitte & the Commonwealth Bank?
“Our data holding analysis shows software and information services businesses in the technology sector hold the most volume of data, close to 28.5k petabytes – around 59 per cent of total consumer data stored in Australia each year,” the report says.
“The widest variety of data in Australia is held by federal, state and local government and agencies, and information, media & telecommunications.”
“Delving deeper to map the consumer data types across businesses within each sector shows public administration and safety (federal, state and local government and agencies) and information, media & telecommunications capture the widest variety of consumer data types and are leading primary sources. Prioritising data from these sectors as part of a new approach to the rollout of the CDR can enable further value to be unlocked.”
The report’s data holding analysis is revealing and useful and is worth reading for that analysis. It was done by Deloitte Access Economics’ partner John O’Mahony.
But the big question Realpolitech has is … why was that data holding analysis not done and made freely available long before now? You know, it’s a bit like the old roadside signs that screamed, Stop. Go Back! You are Going the Wrong Way. The alert is best heeded early in a long journey. It saves a lot of time, money, and emotional angst.
With today’s smart phone and GPS tech, the warning comes in real time; that calm, instructive voice from your phone keeps at you until you are back on track.
It would be helpful if we had something like that for major digital transformation projects in Australia.
Deloitte’s National Banking and Capital Markets leader David Myers, who is an American who worked in the UK during its Open Banking rollout before coming to Australia two and half years ago could only proffer that perhaps we were distracted by other things such as the Royal Commission into banking, federal elections, and such.
Mr Myers opened the recent AFR Banking Summit urging Australian banks, who he says are still recovering from the massive reputational blow dealt by the Hayne Royal Commission, to work on rebuilding trust and to accelerate the digitisation and modernisation of their core platforms.
He and the report agree the big shift globally is toward a consumer-first approach, and not just for banks but for all traditional companies used to operating in reasonably protected industry silos.
“To fully leverage CDR’s potential, it’s important to shift from a sector-based approach to a consumer-centric perspective and consider when people would most benefit from it,” said Mr Myers,
“Key life goals and events – such as starting a family, pursuing education, or recovering from a natural disaster – are crucial moments when important decisions are made. Access to digital services backed by valuable cross-sector data powered by the CDR would help people make well-informed choices. So, prioritising the inclusion of cross-sector data sets in the CDR will deliver the highest value for consumers.”
Realpolitech delved into this strategic shift already occurring globally – from companies operating within discrete industries, siloed and largely separate from customers needs – to one of serving “domains”
Customers don’t live or think in terms of industries. They want end-to-end needs met in cross-sectoral activities such as home, health, education, energy and financial services.
The build-out of secure digital and data infrastructure, increasingly powered by AI, enables precisely that capability for consumers and citizens but requires a massive mindset shift on behalf of legacy companies, governments, and institutions.
But the pay-off for those that see both the trend and the capability is huge. A recent MIT survey identified domain-oriented firms were top performers with a huge premium on revenue growth and net profit margin.
The Deloitte report predicts its version of an ‘expanded’ CDR-enabled digital economy initiative will see Australia earn $16.7 billion in increased value by 2043, with approximately 46,800 jobs from the combined effect of greater competition and innovation from cross-sector data sharing.
Realpolitech has read literally hundreds of other ‘shoulda, coulda, woulda’ reports urging Australia to embrace a new technology-driven growth opportunity. Can anyone name one that we executed early or at all?
