On 21 May 2022, the Australian Labor Party, led by party leader Anthony Albanese, became the government of the 47th federal parliament. The coming to power came after a nine-year period of the Labor Party being in opposition and, moreover, a period of growing disillusionment with the Australian public with federal politics in general. The disenchantment with the federal government most likely resulted from the social and economic disruption caused by the pandemic and the resulting economic upheaval that followed.
The Albanian government has set its sights on solving the problem the rapid increase in the cost of living impacting the financial wellbeing of ordinary Australians. Driven by rampant inflation and supply shortages, initiatives such as the Help to Buy scheme have been implemented to relieve Australians of the worrying unaffordability that has emerged over the past year.
The role of CDR in Australia’s financial ecosystem
One such initiative that could help improve financial well-being is the Consumer Data Rights (CDR) legislation, a policy governing open banking and something the new federal government has expressed concerns about in the past. Despite this, the CDR legislation has made great strides in embracing the future of open data, with access to data extending beyond the banking sector and cited as a key focus for newly appointed ACCC chair Gina Cass-Gottlieb.
Last year we also saw the beginning of a statutory review of the CDR structure, which aims to increase value for consumers and increase competition between businesses. Open banking and CDR have a clear advantage in promoting innovation among lenders and improving the financial well-being of consumers by allowing them to see all their finances in one place and have greater access to special financial products. This is an important step towards solving the current cost of living crisis, which will benefit both the Australian financial ecosystem and consumers significantly.
There is still work to be done
But we have not yet reached the level of open banking that would allow us to move measurably towards addressing the unstoppable cost of living. Indeed, the situation is such that Australians are turning to lending institutions to relieve the pressure of everyday expenses. This has a direct impact on financial institutions, which are under enormous pressure to lend to more people, creating an environment in which some lenders are being scrutinized for their lending practices.
Through CDR’s best practices, lenders will have greater visibility into consumers’ financial situations, enabling them to make faster and more informed lending decisions. For consumers, this technology will ensure the cost of living, allowing them to easily find the best prices on everything from utilities to home loans.
Technology is here and now
There is technology that lenders can adopt to promote the financial wellbeing of Australian consumers. U Envestnet® | Yodlee® we work with lenders like Tic:Toc who have already incorporated AI-based data aggregation to support the loan approval process. This in turn allows the business to build an accurate picture of the customer’s ability to service the loan and ensure that they have the customer’s best interests at heart.
As the cost of living continues to rise, it will be interesting to see how the new government considers the benefits of CDR to support lenders and Australians to make better financial decisions.
By Lauren Applegate (pictured), Director of Customer Success and Marketing Envestnet | Jodli