What the consumer data right could do for Australian brands

In mid-2019, one of the most significant changes to how Australians interact with their financial services providers kicked off with barely a whimper.

The introduction of Australia’s open banking regime promises Australian consumers greater access to the troves of data their banks have accumulated on them. Not that they are likely to know about it however, with the pilot phase kicking off with little fanfare.

That situation may begin to change from mid-2020, when the big four banks move out from the testing phase and begin to provide customers with access to their data regarding a wide range of services and products, including transaction accounts and mortgages.

The slow beginnings for open banking may not necessarily be representative of its long-term impact. Open banking is only the first stage in a broader set of legislative changes referred to as the Consumer Data Right (CDR), which will ultimately provide Australians with access to their personal data held by providers in the utilities and telecommunications sector also.

According to consulting firm ThoughtWorks global client principal, Manu Iyer, extension of the CDR opens up possibilities for consumers to share data across multiple providers.

“The CDR gives the customers the ability to share the data about their lives in order to get the best services for themselves,” Iyer tells CMO. “That shifts the customer to being able to have customised solutions for their needs. More importantly, switching becomes easier, because the context of the customer moves with the customer.”

The rise of the digital banks

While consumers might be proving somewhat apathetic when it comes to having access to their data, the new regulations are proving to be a boon for new entrants, particularly the crop of so-called neobanks which have recently won banking licences. Chief product and marketing officer at neobank 86 400, Travis Tyler, says it will take some time for customers to get their heads around open banking and become comfortable with sharing their information.

Once they do, however, it will be much easier for 86 400 to offer services less focused on creating banking products and more focused on serving customers, in line with the company’s purpose of helping customers take control of their money.

“The power of product will be relegated, and that proposition will be delivered through the service elements that sit around the product,” Tyler says. “What will become more important is holistic propositions, and products in themselves will be commoditised.”

A similar story is also gaining water at fellow neobank, Xinja. “Our purpose is to help people make more out of their money, and the way we are going to do that is through hyper personalisation,” says Xinja co-founder and chief marketing officer, Camilla Cook.

“That means taking people’s data and using it in various ways on their behalf to get to better financial outcomes.

“We are less interested in artefacts or products like credit cards and savings accounts, and more about the level to which you can use someone’s data to help them with their money.”

Cook is also not concerned by the apparent low level of awareness of open banking among consumers right now.

“They don’t know, and they don’t care, and why should they?” she asks. “You don’t sell Netflix by explaining how the menu works. We don’t need to sell open banking to anyone. We just need to provide the service and the facility and let them use it.”

The goal of the neobanks is to use customer data to create more personalised and tailored experiences for customers, which will in turn generate customer experiences that create word-of-mouth to lure more business away from the incumbent institutions. Both Xinja and 86 400 have already invested in systems to make the process of switching easy, with 86 400 able to onboard a new customer in just 120 seconds.

Casting a wider consumer net

But the portability the new era heralds also serves to make it easy for any other competitor to lure new customers away quickly, especially if Australians lift their willingness to change financial services providers.

Iyer says earlier introduction of open banking in the UK and other parts of the world has created a class of organisations that may view Australia’s open banking regime as creating a fertile playing field for international expansion.

“Open banking is lowering barriers of entry into the country for other players from across the world, and innovation happening in other countries will also start coming into Australia,” Iyer predicts.

At 86 400, Tyler hopes to build loyalty through constant service innovation. The company has already launched its Connected Accounts service, which enables customers to see the entirety of their financial services relationships with 150 providers from one location, and can show them their spending patterns and upcoming bills. Open banking will enable 86 400 to use this information to provide customers with insights into their money.

Tyler says 86 400 is banking on the visibility and advice it provides to clients around how to better manage their money as proving sufficient to build loyalty over the long term, in the face of additional competition from over-the-top market entrants who are likely to appear.

Lessons can already been learned from the telecommunications sector, he claims.

“If you look at the telco environment, over-the-top experiences have existed for the last decade, and in the last five years they have really accelerated and pushed incumbents to become dumb pipes,” Tyler says. “You need to have an incredibly strong proposition routed in the problem you are solving and the purpose of the organisation.

“We have one sole purpose, which is helping people take control of their money, and in everything we do, that’s our north star.”

But while banking might be the first industry to experience the CDR, its true value may not be realised until it has progressed into the utilities and telecommunications sectors.

According to director of public policy at the Australian Communications Consumer Action Network (ACCAN), Una Lawrence, as the amount of data consumers generate continues to grow, the CDR presents the potential to leverage this data to provide better outcomes for individuals.

“Ideally, the CDR will increase competition in highly concentrated markets, such as telco, and enable consumers to benefit from their data through reduced prices and more tailored service offerings,” she says. “From a provider perspective, the more they know about their customers, the better they can target offers towards them.”

Up next: What will make or break CDR, plus its ability to disruptive business models

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Success factors

What then becomes critical to the success of the CDR is ensuring it’s easy for customers to interact with their data, that their customer privacy is safeguarded, and that the data is used only by entities within the CDR regime.

“If these aspects are not handled carefully, it will impact trust in the process and limit the potential of CDR,” Lawrence says.

Should all go to plan, extension of the CDR bodes well for consumers, as well as for those organisations in any industry that have come to understand and plan for the CDR first. At Xinja, for example, Cook says the wider rollout of the CDR provides ample opportunity for new forms of relationships beyond what a customer might normally expect from a bank.

“When industries such as banks and telco start to integrate through open banking, we can see what customers are paying and using,” Cook says. “So they can opt to have businesses bid for them in that way based on their data, but in a safe, controlled environment.”

And that creates opportunities for new forms of service providers not confined to specific industries.

“The most successful companies on earth right now do not confine themselves to verticals or think vertically,” Cook says. “They think horizontally. They are platforms that use ever-increasing data skills to manipulate customer data to provide incremental services to customers.”

Hence she says Xinja has adopted social handles such as @xinjamoney, rather than @xinjabank.

“I don’t want to be defined that closely because I do think there is more fluidity here, and I think certainly we will be looking at helping people make more out of their money,” Cook says.

Disruptive force

So while the CDR itself may be some way off becoming a reality for both energy and telecommunications, those organisations investing now to understand its impact may find themselves not just improving their positions within their own markets, but in the eyes of consumers more broadly.

According to Iyer, opportunities exist to link up various service providers to not just deliver the best possible deal for consumers, but also to create chains of services that automatically act on behalf of the consumer based on the rules they set.

“It will be a utility-based economy,” Iyer says. “It is beyond just the consumer being able to make informed choices. It is enablement for the consumer to have those informed choices made on their behalf by others if they so want.”

“Marketers need to know about this because they are the engine that can get this information out and really make a difference for organisations.”

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