Unfreezing consumer data right could unlock 50,000 jobs, Deloitte says
The consumer data right requires consumers to opt-in. Given only 6 per cent of Australians have heard of it, this is proving a steep hill to climb.
Former productivity commission chair, Peter Harris has been championing the consumer data right (CDR) since he hatched it with then-Treasurer Scott Morrison.
“We have very few opportunities in the digital economy for innovation driven by the consumers,” said Harris. Data autonomy is a huge part of the CDR’s business case.
In essence, it is a framework that will require businesses to share consumer data with the consumer or with other businesses upon the consumer's request. The CDR makes provision for accredited data recipients and trusted advisers, such as accountants, who can be nominated to hold relevant consumer data.
The Government planned to release the CDR in stages, one sector at a time, beginning with banking in 2019. In 2022, the right was extended to the energy sector, but progress has been stalled since.
Deloitte Access Economics in their Consumer Data Revolution report released this week, predicted the CDR, if it were rolled out more broadly, would add $16.7 billion to the national economy by 2043 and 46,800 jobs. Why, then, has the government paused its phased rollout?
According to Deloitte, the CDR has had “mixed success” marked by “low consumer adoption, slow expansion, and limited business innovation.”
John O’Mahony, partner at Deloitte Access Economics told us the disappointing results are partly the result of low awareness.
“Only 0.15 per cent of people have consented to the right,” he said, “and, what’s more, only 6 per cent have even heard of it.”
Given the CDR, by definition, requires that consumers opt-in to the platform, low awareness can be fatal. But the opt-in nature of the CDR is not just a feature, it is the heart of the CDR.
The business case of the CDR is three-pronged. Firstly, it can deliver on consumer convenience by allowing data to be shared between businesses, rather than requiring consumers to upload the information separately at each new exchange.
Secondly, it can boost competition between businesses through broader inter-firm information sharing. And thirdly, the CDR is expected to deliver on data transparency and, therefore, security.
The first goal of the CDR as listed by Deloitte is “putting consumers in control of their data” by making data portable, by giving consumers control over where it goes and who can access their data, and by fostering trust through transparency.
Research has found that, so called, data brokers and associated data partners frequently make use of consumer data despite having no direct contact with the consumer.
Seventy per cent of Australians feel they have minimal or zero control over how their data is shared between companies, according to new research from UNSW and the Consumer Policy Research Centre.
Consumer data is a valuable commodity and can empower businesses to create targeted ads, charge higher prices, prevent consumers from seeing other offers, and create a detailed profile to share with a range of interested parties – from landlords, to insurers, and employers.
Awareness might be the main challenge to broader uptake of the CDR, but there are other challenges too. Firstly, any reform designed to facilitate consumer data sharing will likely trigger memories of recent data sharing scandals. O’Mahony said this is notwithstanding the fact the CDR is designed, in part, to help on the data security front.
Secondly, the issue of consumer consent will only get more complicated as the CDR is rolled out more broadly. O’Mahony said many consumers will be asked to remember who they have consented to share their data with, which could derogate from the very purpose of the CDR.
An independent statutory review argued the consent process will be “central” in realising the CDR’s aims and that overly complex consent processes might result in “consent fatigue,” which could “undermine genuine consumer consent.”
Thirdly, questions remain as to whether a one-size-fits-all approach might unreasonably burden smaller businesses. The statutory review noted that “many smaller businesses…will find it increasingly difficult to contribute to policy development and ensure compliance with the CDR.”
The review added that some data holders will consider merging with others to pool resources to avoid “dropping out of the market entirely” or being acquired by larger businesses.
Despite the challenges, the UK’s seven million active users of its open banking program suggests there is success to be had. Open banking, introduced in 2018, required the UK’s nine largest bank to share consumer data.
Since then, the UK has broadened the program to other sectors through the Smart Data initiative.
