Regulatory Data Standards: Fintechs Advocate for Clarity and Consistency
In the realm of open banking, clear, consistent, and comprehensible regulatory data standards are foundational. The Data Standards Body (DSB), which is responsible for developing these pivotal standards, has recently been the focus of public consultation. This process has seen fintechs taking the lead, voicing their concerns and requirements for a more predictable and transparent process.
Role of the Data Standards Body
The DSB outlines the disclosure fields that banks should adhere to when sharing open banking information about their products publicly. This information is known as Product Reference Data (PRD). Equally, the DSB provides guidelines for sharing private individual and business banking data, which can only be disclosed with the consent of the consumer.
As the Consumer Data Right (CDR) ecosystem has grown, the data standards have adapted to support new policy directions, operational issues, and emerging security considerations. This dynamic approach has facilitated the rapid establishment of the CDR framework in open banking since 2020, open energy from 2022, and open finance from July 2026 when non-bank lending joins.
Feedback from the Banking Sector
While the iterative approach has its merits, feedback from banks indicates that there is a need for a more predictable schedule for announcing changes, to align with enterprise resource planning. Furthermore, banks argue that data holder costs should be given more consideration, in addition to competition and consumer benefits.
The Australian Banking Association has been particularly vocal, estimating the cost of open banking to the banks as data holders at $1.5 billion in July 2024.
Former APRA regulator Heidi Richards submitted her Consumer Data Right Compliance Costs Review in August 2024, in which she recommended improvements to stakeholder consultation, transparency, and cost management, including prioritisation and cost-benefit considerations.
DSB Response to Concerns
In response to the feedback from the banking industry, the DSB has taken steps to reduce the rate of change and strengthen the governance processes of updating the regulatory data standards. As a result, the number of CDR standards changes has decreased significantly in recent years.
The Australian Competition and Consumer Commission expressed its concerns in September 2024, when it published the results of a compliance review involving 20 banking sector data holders. The review identified common issues, including failure to follow payload conventions and disclosing inaccurate or incomplete data.
Industry Voices for Data Standardization
Ruth Hatherley, CEO & Founder of Stryd, an open banking-enabled customer retention tool used by mortgage brokers, and James Wigglesworth, Chief Technology Officer and Co-founder at personal financial management fintech PocketSmith, both voiced their concerns about the need for clarity and consistency in regulatory data standards.
They emphasized the issue of “optional” fields in the data standards, which are often misunderstood or misinterpreted, leading to ambiguity and inconsistency in data disclosure.
FinTech Australia Submission
FinTech Australia made a submission on behalf of its members, supporting the DSB’s objective of improving the way regulatory data standards are developed, assessed, released, and implemented. The organization stressed the importance of clarity, enforceability, accountability, and functionality of the standards for all CDR participants.
FinTech Australia also highlighted the need for greater transparency and stakeholder engagement in the standards development process, including smaller targeted workshops and active participation by key participants in the CDR regime.
As the CDR ecosystem continues to evolve, the clear message from fintechs and other stakeholders is that clarity and consistency are paramount in the development of regulatory data standards. It remains to be seen how the DSB will respond to these demands and what steps will be taken to improve the standards development process.
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