Data quality concerns surround open banking scheme

Joseph Brookes
Senior Reporter

Questions remain about the quality of data being used in Australia’s “world leading” consumer data portability scheme one year after it was launched, according to its newest entrant.

Basiq, a Sydney-based financial data platform, last week joined a handful of other financial companies and Australia’s biggest banks in being accredited for Australia’s Consumer Data Right (CDR) Scheme, which is first being applied to the banking sector as open banking.

The company has been going through the accreditation process for the last six months, and has spent more than $100,000 on this process.

The government is trying to speed up the rollout of the scheme, which requires banks to share consumer data in a machine-readable way, with new reforms.

Treasury has proposed rule changes which would allow a “sponsored accreditation model” to boost participation, after complaints it was too onerous for smaller companies to participate.

More than one year into operation and Open Banking in Australia remains at a “beta” stage, according to a participant.

Basiq founder and chief executive Damir Ćuća told InnovationAus the latest bump in accredited data recipients and the potential sponsorship pathway for others are welcome developments for open banking.

But there are questions about the quality of the data which will be shared between them, according to Mr Ćuća, who is also a member of the Banking Advisory Committee which supports the development of CDR technical standards.

“There’s not much data flowing anywhere [under open banking]. So we just don’t know,” Mr Ćuća told InnovationAus.

Organisations have had several years to prepare for open banking, including a staged rollout that began with sharing product data early last year and ramped up to consumer data by July 2020 for major banks.

Mr Ćuća said it has mostly been product data like interest rates being shared in practice and the consumer data expected to drive innovation and reduce barriers to switching has not flowed at a “production” level yet, despite despite major banks being required to share it for a year now.

“I expect that we’ll see a lot of a lot of issues in terms of data quality once it starts ramping up in production,” Mr Ćuća said.

“By no means is this done. It’s definitely kind of at a beta state.”

Regulators too have some doubts about the extent and quality of data being shared, according to minutes from meetings of key stakeholders.

The Australian Competition and Consumer Commission (ACCC) investigated claims by data recipients earlier this year that data holders were not sharing all the data they are required to under the scheme’s rules, and some of the information being shared was not of an acceptable quality despite clear requirements and standards.

“While there appears to be a generally high level of compliance across [data holders], [the ACCC] have identified a number of potential data quality and availability issues and they have written to each of the banks affected by that apparent discrepancy to ask for more information,” the latest Data Standards Advisory Committee meeting minutes from April said.

Mr Ćuća said he still has confidence in the scheme, and the latest proposed sponsorship for accreditation reforms are a “phenomenal step in the right direction” which should see many more fintechs come on board.

Treasury last week released CDR rule proposals to “support new pathways for participation in the CDR”, including new models to allow accredited data holders to sponsor others for participation or allow them to offer services on their behalf.

Under current rules, companies need their own CDR accreditation to receive consumer data shared through open banking and use it in their own products and services.

The proposed changes could see fintechs effectively using accredited data holders like Basiq’s infrastructure or providing services on their behalf, dramatically increasing the number of companies involved in the scheme.

Basiq has spent most of the last year and more than $100,000 to gain accreditation as a data recipient. Mr Ćuća said for the data portability scheme to be effective trusted partners need be able to leverage that accreditation.

“We’ve got over 120 fintechs on our platform,” he said.

“The [accreditation] process has to be dramatically eased in order to help get them on…now that we’ve got our full accreditation and if they’re piggybacking off our infrastructure, why should they have to go through the same rigours and processes?”

If the scheme does finally get going, he said that industry incumbents will quickly face new challenges.

“I think for some of them it will be survival mode. Particularly now that the natural protection of the data being locked up and it being hard to switch is changing [with open banking],” Mr Ćuća said.

“Now with that data flowing so easily, it’s really going to put a lot of pressure on them to act fast and be really smart and online read, and competing directly against fintechs.”

Do you know more? Contact James Riley via Email.

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