Action Initiation: The next step for CDR innovation

The federal government’s recent move to propose changes to the legislative framework of the Consumer Data Right (CDR) to support Action Initiation is a game-changer for consumer empowerment and data control. Not only does it advance the role of CDR for consumers, but it also prompts industry to continue to innovate and develop new and beneficial customer services.

For those who haven’t followed the CDR’s development closely, it is a consent-based regulated data-sharing system that enables consumers to share their data held by service providers (like banks and energy companies) with accredited parties to receive data-driven services. Under CDR, the consumer is in complete control of who they choose to share their data with and exactly how it’s used, and can withdraw their consent at any time. All of this is enabled through secure automated data-sharing technology and is overseen by Australian Government regulators. The regime will be rolled out sector by sector, with the banking, energy and telco sectors already included, and expansion to the finance sector well underway.

Amid the continued extension of the CDR to new sectors, the government has now also taken the exciting first steps to deepen the system’s functionality through Action Initiation.

What is Action Initiation?

Broadly put, CDR Action Initiation will extend a consumer’s ability to grant read access — where they can consent to a third party seeing their information held by their service provider — to also allowing them to grant write access — where they can consent to a third party instructing their service provider to take actions on their behalf. This means that, when Action Initiation is integrated into the system, consumers will be empowered to not only access their data, but also put it into context to automate the management of their accounts and services.

Confused? Fair enough. An example of where Action Initiation could change our digital economy is in product selection. At present a consumer can view a range of different products, but it’s difficult to discern which product is the best for their personal circumstances, and it takes a whole lot of effort to actually set up a new account and close an old one.

Using CDR’s existing functionality, a comparison service can review a consumer’s data to gain a detailed assessment of their individual needs and provide a truly tailored product recommendation for the consumer to pursue. Using Action Initiation, consumers will be able to consent to that comparison service actually acting on that recommendation, further streamlining the switching service by undertaking the admin needed to apply for a new service, set everything up and close out the old account.

Action Initiation will boost innovation

Action Initiation will introduce significant benefits to consumers by providing the technical and regulatory infrastructure needed for businesses that want to offer new services or simplify old ones. Action Initiation will provide a pathway for removing the everyday friction and tedious manual administration that takes up so much of a person’s life.

By introducing a new way for consumers to safely and securely authorise third parties to act on their behalf, a world of new beneficial consumer services will become available. In the context of improved switching, Action initiation will now force existing service providers to further innovate to ensure they are delivering the very best products for their customers, lest they risk losing out to those who will.

Other Action Initiation applications could make the mundane more manageable. At present, if you move house and need to update your billing details you need to go to each provider separately to do so. Action Initiation will make it possible to give your details to a single accredited third party which can then instigate the process to have your details updated with all of your current service providers at once. These providers would then need to come to you to confirm the details they received are correct, removing a lot of the cognitive load associated with such tasks.

At a more sophisticated level, Action Initiation can also be used to improve personal finance management tools. For example, with interest rates for savings accounts on the rise, those of us with multiple bank accounts might benefit from more savvily distributing our funds between accounts to make sure we’re optimising returns. Currently that’s something a consumer would need to do manually, taking a fair amount of time (and maths) to get right. With CDR Action Initiation you could give a third party financial management service permission to monitor your finances and automatically move your money between your accounts to maximise your monthly interest payments. It could also scan the market for other products that might be a better fit for your financial position and even help you switch.

Through Action Initiation, CDR is being supercharged — transforming from a data-sharing system to the foundational infrastructure upon which groundbreaking new digital services will be able to deliver beneficial outcomes for all kinds of consumers. Soon we will see the full potential of CDR, with a whole new range of products being made possible that provide consumers with an as-yet-unseen level of transparency, security and control. This is without doubt the most exciting time to be involved in the CDR system.

Further allowing consumers to securely benefit from services informed by their own data, with appropriate protections and regulatory oversight, is the best way to promote consumer choice, convenience, confidence and control in how their data is used, while also giving industry the tools needed to continue to advance and innovate. It will set the standard for what consumers expect of those who use their data.

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