What is open banking?

Open banking was introduced in Australia amid much fanfare, promising to make the financial ecosystem more transparent and competitive.

As at the end of 2025, banks have so far spent more than $1.5 billion implementing it, but what has sharing banking data done for everyday Australians?

What is open banking?

Open banking is a system that allows customers to share their personal or business banking data with accredited third parties - but only with their consent.

The exchange takes place under federal Consumer Data Right (CDR) laws, designed to give customers better control over their own data and in a bid to promote competition and innovation.

The laws cover multiple sectors but started with banking under a pilot program in 2019 before key customer data sharing began in July 2020.

Essentially, it allows customers to opt in to securely share their banking data, including accounts, transactions, and loans information, with other financial institutions or companies.

CDR is also designed to replace the unregulated, alternate method of data sharing known as 'screen scraping' which can expose consumers to cybersecurity risks.

What has changed since open banking came in?

There are a few practical changes and developments that can be attributed to open banking. These include:

• Faster, more streamlined loan application processing: Lenders and mortgage brokers can quickly access customer financial data (with customer consent)
• New financial tools: Personal finance and budgeting apps can amalgamate users' financial data from different institutions in one place
• More secure platform for data sharing: Allows customers to share data with other parties more securely than via previous methods such as screen scraping (which is still being used by organisations who aren't yet participants)

How can open banking and CDR boost competition?

As it stands, the CDR currently provides 'read-only' only data. Data recipients can look at it to help them assess loan applications, understand their customers' full financial situations, or provide product comparisons.

Eventually, the government wants to 'activate' the CDR so companies can act on customer requests to take up new products, such as closing an existing bank account and opening a new one elsewhere. 

It's envisaged this will help consumers ensure they are using the best products for their individual circumstances, not just across banking but other sectors set to comply with CDR laws in the future.

The energy sector followed banking in consumer data sharing in late 2022, with plans to roll out compliance for the telecommunications and insurance industries in the future.

How many people are using CDR?

The Australian Competition and Consumer Commission (ACCC) has reported more than 800,000 consumers had used the system between January and July 2025 - up 50% on the previous six month period.

It's estimated more than one billion CDR requests were recorded during 2025.

1. Savings.com.au's two cents

There is little doubt CDR initiatives will give consumers more control over their own personal data, not just in the banking sector but others where comparing and switching products can be a confusing and time-consuming exercise.

But as with implementing many new systems, the process has so far proved expensive, relatively slow, and been bogged in compliance red tape.

Nonetheless, any scheme that safeguards security and promotes the best use of consumer data should be worth the inevitable teething issues and expense over the long term.

Here's hoping for everyday Australians, data indeed proves to be king in helping them find the best products for their personal circumstances - across many markets.  

What are hurdles to open banking in Australia?

While the idea of open banking has been largely welcomed, it has met with a few challenges, including:

• Limited customer awareness: Many consumers are unaware of what 'open banking' is, what it means to them, and its potential benefits. Many consumers remain reluctant to opt in to share their financial data and banks may not be adept or equipped in explaining it to them
• Technical hitches: As with many new systems, open banking has had its share of tech issues regarding access and data quality. Users have reported access difficulties and that some bank data is inconsistent or unreliable, slowing their operations and creating distrust
• Costly to set up: The cost of implementing systems under compliance requirements is reported to be expensive, lengthy, and bureaucratic. This has presented take-up challenges, particularly among smaller organisations with lower turnover
• Little motivation to implement: Larger organisations with bigger budgets arguably have the most to lose through their rusted-on customers being able to use personal data to compare products offered by competitors. Some commentators suggest this has seen them do the bare minimum to comply with regulations
• Compliance burden: Many organisations see open banking as being more about meeting complex compliance requirements than about serving consumers or driving innovation

Banks fined over CDR rule breaches

Several major banks have been fined for breaching Consumer Data Right regulations.

In December 2025, CommBank paid a penalty of $792,000 for failing to enable data sharing for some business and partnership accounts.

NAB was hit with a $751,200 fine in June 2025 after failing to share credit limit information requests on four separate occasions.

HSBC, ING, and Bank of Queensland have also been penalised for various breaches including poor data quality or inaccuracies, or missing data supply deadlines.

The penalties are issued by the ACCC. 

What's happening with open banking now?

During 2026, open banking, via Consumer Data Right provisions, is set to expand to include non-bank lenders and buy now, pay later (BNPL) providers.

See also: Banks vs credit unions vs non-banks: What's the difference?

In the meantime, some smaller banks are still struggling to comply with CDR requirements. A group representing smaller customer-owned banks reported to Treasury its members had spent more than $100 million on the CDR (as at 2025) and had seen "minimal benefit" so far.

Treasury has said the Albanese government is looking at a reset of the CDR in a bid to find opportunities to reduce compliance costs and increase uptake.