Data-related services will play an increasingly important part in the businesses of Australian financial institutions in coming years, as Open Banking takes hold.
The passage of Consumer Data Right legislation last week has started a discussion about the impact the new regime will have on the financial services sector. In a report prepared for Commonwealth Bank, KPMG says the application of the Consumer Data Right in Australia will be widespread, with leading banks providing a range of data-related services to customers such as consent management-as-a-service.
“The more data that is created and available, the harder it may be for any individual to manage and control what happens to the thousands of data points that will be collected,” says KPMG’s banking leader Ian Pollari.
“As consumers become more data aware and discerning about what data they share, providers will have a role in helping them manage it.”
The new consumer data right is designed to give consumers and businesses access to transaction information held by various service providers. It authorises accredited third parties and “gateways” to provide access to the data.
The Government’s aim is to give consumers more control over their transaction information, leading to more choice in where they do business and more convenience in managing financial and other services.
CDR should reduce the barriers that prevent consumers from shifting between service providers. Consumers will be able to direct that their data be shared with other providers.
The Government has said it will apply CDR to banks, energy companies and telcos initially and then across the economy. CDR as it relates to banking is referred to as Open Banking.
The Government is also hoping CDR will open up business opportunities “as new ways of using data are created.”
The KPMG report says banks will have a role in helping customers compare the cost and value of different products and services, such as utilities, or in managing household budgets.
Banks of the future will use data to build a 360-degree view of their customers, to increase the value of the services they offer.
“Successful banks of 2030 must master the data-driven customer experience, underpinned by artificial intelligence and robotic automation,” the report says.
Banks could become the safe place to store data, and by 2030 they will be managing data in the same way they manage financial assets. Customers will instruct banks to share their data with particular providers or withdraw data from a provider.
With the extension of CDR beyond banking into other sectors, banks will bundle relevant services around key customer needs that extend beyond traditional financial services.
“Consumers have witnessed mass-personalisation through many of their digital experiences, such as Spotify personalized playlists. They will soon expect the same from financial services,” the report says.
Examples of personalisation across financial services may include specific pricing of products, with terms aligned to specific requirements; the availability of in-depth analysis of spending and savings patterns.
Banks will use this depth of understanding of customer spending habits to provide recommendations for better energy plans and other services.