Samuel G Brooks
Samuel G Brooks

Block8's Chief Technology Officer

01.06.2020. in Technology, Thought Leadership, Solutions

Digital Australia and Open Banking

There has been an encouraging history of intent to improve the digital innovation landscape in Australia. While the specific branding of the Government’s strategy changes with political guard, the data-related productivity and innovation political agenda has emerged from successive Government-sponsored inquiries tasked with informing national economic strategy.


The 2014 Financial System Inquiry (the Murray Inquiry) recommended a formal review into the benefits and costs of increasing the availability and improving the use of data in Australia. Similarly in 2015, the Harper Review of Competition Policy recommended a review to consider ways in which to improve individuals' ability to access their own data to inform consumer choices.

The Turnbull Government supported these findings the following year, and seeking to consider policies to increase availability and use of data to boost innovation and competition in Australia, the then Treasurer Scott Morrison commissioned the Productivity Commission with an inquiry into “Data Availability and Use” in 2016.

One of the key recommendations from that inquiry was a new “Comprehensive Right for consumers to actively use their own data and represent fundamental reform to Australia’s competition policy in a digital world.”[1]

Shortly thereafter this manifested into a commitment from the Government to install what is now known as the Consumer Data Right (CDR), with the Treasury Review into Open Banking delivered in 2017 guiding the initial implementation into financial services.

Most recently, Treasury's Issues Paper on the Future Directions for the Consumer Data Right is the latest instantiation of our nation’s data-driven journey. "Australia's Tech Future" is the name of the latest national innovation strategy under the current Minister for Industry, Science and Technology, Karen Andrews, and outlines where the Government should be investing to embrace digital technology to help Australia to “continue our strong record of 27 years of uninterrupted economic growth.”[2]

DOWNLOAD OUR RESPONSE TO TREASURY

Looking back, the original intent and implementation of the Consumer Data Right appears to be another step in the right direction to improve financial service industry competitiveness and efficiency. There is a clear political desire to:

  • Diversify Australia’s economic output, with a focus on advanced digital services
  • Catalogue and compare sources of digital innovation
  • Invent new sources of business activity
  • Improve market competition and efficiency
  • Improve the delivery of government services, including leveraging under-utilised assets

And so looking forward, the future direction for the CDR - a “CDR 2.0” - represents an opportunity for the Government to coordinate a broader, more integrated, and more consumer-centric manifestation of Australia’s digital economic strategy.

 

Open Banking

The Consumer Data Right (CDR) gives customers, including individuals and business customers, the right to access certain data about them held by businesses, and direct that their information be transferred to accredited, trusted third parties of their choice. The CDR is being deployed on an industry-by-industry basis as the specific scope of data to be included under the right will vary according to the activities within that industry. At the core of the intended consumer benefit is “an improved ability to compare,” in order to, “either negotiate better deals with their current providers or switch products.”[3] The implementation of the CDR into financial services is known as “Open Banking.”

Block8’s view is that Open Banking has taken an appropriately practical approach in its current form and time horizon. We have confidence that it will materially improve consumer outcomes in Australia in line with the stated objectives. However, the future of the scheme should appropriately investigate newly available paradigms and emerging technologies.

The implementation of Open Banking is due for industry completion in 2020, having been significantly guided by the Review into Open Banking (“the Review”). Gaining industry consensus on these specific datasets is one of the key activities for the CDR rollout, and the Review consulted with industry on the practical product outcomes Open Banking could unlock for the end consumer. The ability to have accurate product comparison tooling was a major theme that ultimately guided the recommended scope of data to be made available, being transactional data for transaction and lending products operated by Authorised Deposit-taking Institutions (ADIs). While the Review recommended that the implementation of the CDR should be extensible in order to support a broader data ecosystem to advance the digital economy[4], it nevertheless recommended a specific fixed number of datasets for the initial implementation that may not support the full scope of future services to be offered by the new market landscape.

Beyond the fixed scope of data included under the right is another important subtlety: the new right applies only to the access, update and release of the information. An erroneous conclusion can sometimes be drawn that the data in question belongs exclusively to the consumer. This is a subtlety that is not accurately conveyed in the common political discourse around the need for consumers to “own their data,” as if it’s exclusively theirs. The CDR is not an equivalent of the European GDPR (deletion is not a part of the right), nor does it cover the enriched and proprietary datasets that have used consumer data as an input. It is a joint right to access and use the generated data by both parties, not to form exclusive ownership. This is a relevant distinction for our recommendations put forward in our full Response to the Treasury Issues Paper.

 

Fundamental change is needed. There are key unanswered questions that go to the fundamental rights of individuals to control data held about them, and how individuals — as consumers — can use data more effectively for their own benefit, that lie at the heart of data availability and use. These questions necessitate an across-the-board rethink of the way data is managed.[5]

In the context of our Response, we highlight the following pertinent recommendations from the Review and offer brief comment ahead of further discussion:

Recommendation 1: “Open Banking should not be mandated as the only way that banking data may be shared. Allowing competing approaches will provide an important test of the design quality of Open Banking and the Consumer Data Right.”

Block8 holds the view that appropriate use of distributed ledger technology can facilitate superior CDR outcomes over some aspects of the current technological design.

 

Recommendation 2.9: “The ACCC should have responsibility for ensuring there is a public address book showing who is accredited.”

Block8 holds the view that certain kinds of public information are best delivered using a public blockchain, potentially including the implementation of the Address Book as a programmable source of truth for reference by smart-contract-enabled business processes.

 

Recommendation 3.4: “If directed by the customer to do so, data holders should be obliged to share the outcome of an identity verification assessment performed on the customer, provided the anti-money laundering laws are amended to allow data recipients to rely on that outcome.”

Block8 holds the view that anti-money laundering laws should be amended to allow ‘portable KYC’ to be developed using an appropriate extension of the CDR. This is a key feature for truly enabling digital identity in Australia.

 

Block8 develops technologies that target the most foundational digital mechanisms of our economy, for it is here that the greatest efficiencies can be found.

By developing fairer and more efficient data and transaction systems for Australian businesses and consumers, we can simultaneously decrease operational and compliance costs, increase industry competition, and improve consumer outcomes.

 

[1] Productivity Commission data, Data Availability and Use, Inquiry Report, 2017

[2] www.minister.industry.gov.au/ministers/karenandrews/media-releases/setting-agenda-australias-tech-future

[3] Consumer Data Right Overview, The Australian Government the Treasury, September 2019

[4] Review into Open Banking, The Australian Government the Treasury, December 2017 (“The Farrell Report”)

[5] Productivity Commission 2017, Data Availability and Use, Report No. 82, Canberra

 

Download Block8's response to treasury's issues paper Download here

 

Block8 would be happy to further discuss our thinking on any of the topics covered above, including specific detail on solution architectures and demonstrations of currently working distributed ledger systems developed to address the challenges and opportunities outlined in the Issues Paper and our Response.

 

Our experts are also available to assist with research mapping the value chains for centralised and decentralised approaches, the identification of the highest-value areas for a consumer-centric data infrastructure, or working with the Government and other members of industry in the development of pilot programs.

 

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About the Author: 

Samuel_Brooks_Block8_CTOSamuel Brooks is an expert in connecting next-gen technology with current-gen business problems, with particular specialisation in the development of distributed ledger systems, having designed many DLT-based solutions and authored and contributed to multiple public submissions from both industry and government.

He is also an active member of the Australian blockchain community, including regularly speaking at technology conferences, meetups and podcasts, and contributing to industry and International Standards committees.

Samuel holds a degree in Electrical Engineering from UNSW and has been working hands-on with blockchains since 2014.

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