Open banking connecting costs ‘prohibitive’ for fintechs

Independent provider of direct bank data feeds, SISS Data Services (SISS), has announced that it has completed the ACCC’s Conformance Test Suite to become an active accredited data recipient (ADR) under the Consumer Data Right (CDR). 

Speaking of the accreditation, SISS founder and chief executive Grant Augustin said: “With more than 2.4 million Australian businesses needing secure and reliable banking data each day, completing this exhaustive ACCC process is a significant milestone for our company.”

As per the ACCC, the Conformance Test Suite is one aspect of the CDR onboarding process, allowing “participants to test their compliance with the Consumer Data Standards and CDR Register design”.

For participants wishing to become ADRs, the tests “provide a simulated data holder and a simulated [CDR Register] to support the test scenarios”. 

Currently, there are 28 ADRs under the CDR, 15 of which are active at the time of writing.

Further, a 97.65 per cent market share of household deposits is now covered by CDR data sharing.

However, while SISS founder has stated that, as an active ADR, SISS can expand the range of banks and data it supports, he also said that the costs of connecting to open banking are currently prohibitive for fintechs.

Noting that the roll-out of the CDR regime in Australia has been slow, Mr Augustin added that the experience of the accounting software industry reflects these current hurdles. 

Mr Augustin said that, while this specific industry requires accurate reliable access to banking data, due to the high costs of compliance and the limitations on how data can be moved between accounting applications, open banking is not “the panacea the industry was hoping for”. 

He continued to note that, for now, “closed banking” remains the gold standard, and that recent regulatory changes are sought to enable open banking to provide a viable addition to existing infrastructure. 

In a statement provided to Mortgage Business, FinTech Australia CEO Andrew Porter said that the ACCC has already responded to the slow start to ADRs by introducing intermediaries, “helping fintechs easily and cost-effectively attain and leverage consumer data”. 

“The phased approach also enabled a strong focus on security, privacy and transparency to build consumer confidence in using the new regime,” Mr Porter added. 

“The different access models has increased the number of businesses that can access the CDR and created new use cases. 

“We’ve noticed an overall growth in the industry with the lower barriers for new entrants.”

Morrison government confirms CDR statutory review

Mr Augustin’s questioning of CDR comes as the Morrison government confirms it will be commencing a statutory review on the operation of the CDR, with the review expected to be completed by July 2022. 

The former deputy secretary of the Department of Industry, Innovation and Science, Elizabeth Kelly PSM, has been elected to lead the review. 

In a statement supplied by the Minister for Superannuation, Financial Services and the Digital Economy, senator Jane Hume, the review comes with the near-complete implementation of open banking, and the confirmation that the broader finance sector will be the fourth that the CDR expands into.

The review’s focus has been said to include the implementation of open banking as well as the introduction of CDR rules to cover the energy sector, which is expected to see data sharing commence from later this year.

The review will also take into account other “relevant CDR developments”, such as the Digital Economy Strategy, the government response to the final report of the Inquiry into Future Directions for the Consumer Data Right, the Consumer Data Right Strategic Assessment, as well as other international developments.

Ms Hume said: “The statutory review is timely given the significant progress to date. 

“It provides an opportunity to reflect on what’s worked well, any lessons learnt and areas to strengthen the statutory framework to support economy-wide implementation, as well as deliver tangible benefits to consumers and underpin a world-leading digital economy.” 

[Related: New CDR expansion to make mortgages easier]