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Becoming an ADR: Australia’s best kept banking secret

Becoming an Accredited Data Recipient has something going for it that other banking projects don't – it's really easy to do!

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29 Nov 2021
Balancing innovation and compliance has technology teams in Australian banks exhausted right now, as they try to be everything to everyone, within one of the most regulated industries on the planet. Consumer expectations around digital experience continue to grow, pushing out the breadth and boundaries those tech teams need to cover. Specialised fintechs provide endless competitive offerings, seemingly overnight, leaving banks scrambling to get together the resources to respond. Aside from being zero fun, is this model really sustainable? Moreover, the perception is that the banks are never quite innovative enough, as they always seem to be lagging behind.

The best kept banking secret

Enter the Consumer Data Right (CDR), Australia’s ambitious and exciting economy-wide data reform and – you guessed it – more work for technology, product, compliance and service teams.At the time of writing, most Australian banks are doing an okay job of being Data Holders, publishing some basic open banking data. They made it to the finish line, as required by law, but it wasn’t pretty. And making this data available to the growing number of Accredited Data Recipients (ADRs), on demand, 24/7, in real time is an ongoing commitment – and we’ve got joint accounts and more coming next year. So perhaps it's little wonder the banks haven’t embraced the other side of the open banking ledger: the ability to ingest data digitally from each other. To date, only two have a product in the market.Maybe it’s because they don’t have to do this? Maybe it’s because it’s optional? Maybe it’s because when you’re already at capacity, you prioritise the things you must do? And right now who has time to build the necessary integration as an ADR, let alone design and develop products to stand on top of that?Yet, despite the overhead of being a data holder, open banking does offer a silver lining for those banks able to embrace the role of a data recipient. It can really move the needle on big strategic metrics like cost-to-income and NPS.And here comes Australia’s best kept banking secret: unrestricted Authorised Deposit-taking Institutions (ADIs) under the Australian Prudential Regulation Authority’s framework meet the criteria for streamlined accreditation. The CDR Rules say that Australian banks, unlike the high-achieving non-bank fintechs, have a free pass to become accredited as open banking data recipients. Banks already have dispute resolution processes, and comply with prudential standards for fit and proper persons and information security, so it’s actually very easy to do.

Your legitimate shortcut to open banking

That just leaves the process of integrating with the CDR ecosystem – all the other data holders, the ACCC register, and the consumer. There’s no need for banks to build and maintain all those connections in-house because there’s a much easier way. By partnering with TrueLayer, banks are able to use their unrestricted accreditation to plug into the ecosystem in a few short weeks. Using a specialist intermediary like TrueLayer removes the complexity and compliance burden of ongoing open banking integration, by outsourcing boilerplate integration work to specialists. This enables banks to focus on higher-value projects where they can secure a competitive advantage.Using our infrastructure, proven and tested in the UK and Europe for more than five years, banks can play on both sides of Australia's open banking field.

Banks' secret use case weapon

While personal finance management and account aggregation are still the most talked about use cases, banks have a much more strategic card to play, one that directly impacts their bottom line.It's lending, a use case we expect to be turbo-charged by open banking. Lending is the number one source of revenue for banks, yet most still have an operationally intensive and costly loan application process requiring the borrower to provide a lot of personal and financial information that is then manually checked. Open banking can streamline the process of verifying borrower income and debt serviceability by allowing loan applicants to share extensive bank account history, which can then be processed and analysed in seconds. Conditional approvals can be rapidly issued to applicants, reducing the workload of assessors and creating capacity to review more complex edge cases. Risk teams appreciate the decision consistency and rejection of screen scraping, regulators appreciate the enhanced responsible lending practices, and consumers appreciate the digital experience and rapid turnaround that gets them into their new homes faster.

Talk to TrueLayer about accessing CDR data

As an award-winning global pioneer of open banking, and an ACCC authorised unrestricted ADR here in Australia, TrueLayer is able to collect data on behalf of our clients to open up the whole of finance. In September, we launched our Open Banking Platform in Australia, channeling more than five years of UK open banking integration experience through a single API, exposing account, transaction, identity and other customer data from every participating Australian bank.Come and talk to us today about kick-starting your data recipient journey and unleashing the power of open banking within your organisation.

About the author

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Head of Banking – Australia & New Zealand
Rob Hale leads TrueLayer’s Australia and New Zealand banking client relationships, helping banks harness the power of the Consumer Data Right. He supports our commercial, product and engineering teams to localise TrueLayer’s global platform across data, identity and payments.

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