How technology can help Australian’s make better financial decisions to support cost of living pressures
On the 21st of May 2022, the Australian Labor party, led by party leader Anthony Albanese, became the government of the 47th Federal Parliament. The rise to power followed a nine-year period of the Labor party being in opposition, and moreover, a period of increasing disenchantment among the Australian public with federal politics broadly. The disenchantment with the federal government likely stemmed from social and economic disruption brought on by the pandemic and the consequence of the economic upheaval that followed.
The Albanese government has set its sights on addressing the soaring cost of living impacting the financial wellness of everyday Australians. Brought about by rampant inflation and supply shortages, initiatives such as the ‘help to buy’ scheme have been implemented to help relieve Australians from the alarming unaffordability that has ensued over the past year.
The role of CDR in Australia’s financial ecosystem
One such initiative that could help to address financial wellness is the Consumer Data Right (CDR) legislation, a policy which governs open banking and something the new Federal Government has expressed concerns about in the past. Despite that, CDR legislation has made great strides towards embracing an open data future with data access being expanded beyond the banking sector and being cited as a major focus for the newly appointed ACCC chair, Gina Cass-Gottlieb.
Over the past year, we also saw the commencement of a statutory review of the CDR framework, which aims to driver further value for consumers and increase competition among businesses. Open banking and CDR have the distinct advantage of promoting innovation among lenders and increasing financial wellness for consumers by allowing them to see all their finances in one place and have greater access to tailored, financial products. This is an important step towards solving the current cost of living crisis, and one that both the Australian financial ecosystem and consumers stand to benefit significantly from.
There’s still work to be done
But we haven’t yet reached the level of open banking that would enable a measurable shift towards solving the rampant cost of living. Indeed, the situation is such that Australians are turning to lending institutions to relieve the pressures of day-to-day expenses. This has the knock-on effect on financial institutes who are being put under immense pressure to lend to greater volumes of people, creating an environment where some lenders are coming under scrutiny over their lending practices.
With better practices under CDR, lenders will have more visibility of a consumers financial situation allowing them to make quicker and more informed lending decisions. For consumers, this technology will provide cost of living opportunities by allowing them to easily find better prices from utilities to home loans.
The technology is here and now
The technology exist, which lenders can adopt to help drive financial wellness for Australian consumers. At Envestnet® | Yodlee® we’re working with lenders such as Tic:Toc who have already onboarded AI driven data aggregation to support its lending approvals process. This in turn is allowing the business to paint an accurate picture of a customer’s ability to service a loan and ensure they have the best interest of the customer at heart.
As the cost of living pressures continue to mount, it will be interesting to see how the new government looks to the benefits of CDR to support lenders and Australians making better financial decisions.
Penned by Lauren Applegate (pictured), Director Customer Success & Marketing at Envestnet | Yodlee