We are now several years into the rollout of the Consumer Data Right (CDR) initiative across the banking sector. Initially rolled out to the big four, it now includes the non-major banks who, in addition to providing product information, are enabling consumers to share their data from multiple transactions such as home and personal loans, business finance and overdrafts as well as account information. The process is about to start again shortly with the Energy companies and then later with the Telcos.
As with Open Banking these regulations will create opportunities for existing energy companies to build a closer relationship with their customers through value adding new services as well as driving competition by enabling new entrants.
The initial retailers (AGL, Origin, Energy Australia and AEMO) in the energy market must commence product and customer data sharing in the next few weeks and the 12 month countdown for the remaining large retailers has started giving a timely reminder to all of these organisations to start preparing now.
Given the experience we have had with Open Banking I thought it was a good opportunity to ask our FINS expert, Adrian Melillo, what lessons the Energy companies (Initial, Large and Small) can learn.
‘Adrian, thinking of your interactions with both the big 4 and some of the smaller banks around Open Banking what would you say are the three priority considerations the Energy companies should be thinking about now’
Get your Foundations Right
Firstly, get your foundations right. Use the time now to get the foundations of your systems right for CDR. We recently had a timely reminder about how opening your systems and data up to third-party access can be fraught with danger. Open the wrong port to the wrong people and you could have a major data breach on your hands. The good news is that this can be easily avoided if your company invests wisely in ensuring your systems are safe, secure, reliable and performant. This starts with having a clear integration strategy to ensure the data is available, reliable and verifiable. The strategy may highlight gaps in your technology suite such as an API Management solution; or process changes to ensure your data is fully governed and managed, or even new roles in your organisation such as a Product Owner for the CDR APIs.
It is never too early to comply
Second, while there are no penalties for early compliance there could be for late or non-compliance as we saw with the Bank of Queensland. While many energy companies may be reluctant to share the data they hold, they will be required to meet their CDR compliance obligations. To achieve this they will need to analyse the type and extent of the data required to be made available; assess the readiness of their technology landscape, review their data governance practices, and audit their security, privacy and identity controls. For many companies this will be the first time a third-party has been able to access their data and so new capabilities will need to be introduced to enable gateway access and authentication and consent controls. As this will require effort and investment, the time to start planning is now. Banks that started their planning for Open Banking early and wove it into their existing digital transformation initiatives are benefiting from their readiness to take advantage of the competitive opportunities offered by CDR, as well as avoiding the wrath of the regulator.
Embrace the Opportunity for Innovation
And finally, embrace the opportunity. While there is an understandable focus on compliance, the lesson from Open Banking is that this is a risky strategy in the medium to long term. CDR is all about driving competition by facilitating new entrants, partnerships and business models. An energy retailer that simply complies with the regulations risks being outflanked by those who leverage the new data available to improve customer experience while reducing operating costs. Businesses should view their investments in capability and innovation programs in the context of the myriad opportunities from the CDR. Doing so will advance their CDR agenda ahead of time and ensure all ongoing investments are geared to take advantage as it is implemented. The power of data is already well acknowledged and leading energy players are engaged in modernising their approach. With more accurate and granular data expected to be delivered by the CDR, there is an immediate opportunity to think about using it not just for uplifting capabilities internally, but also to deliver new revenue streams.
‘And so, what would be your advice for next steps for both the Initial and Large Energy retailers’
Retailers should start with a CDR readiness assessment that reviews not just their technology, but also their processes, policies and people against the proposed energy-specific CDR rules. Create a gap analysis between your current state and these requirements in light of opportunities afforded by CDR. With this gap analysis completed (and externally audited) the focus can shift to creating a CDR response strategy which could include:
- A plan for technology-proofing existing systems once CDR is live
- Developing an open-API strategy
- Re-aligning data-sharing capabilities between internal and external users
- Agreeing on cross-sector market strategies (and testing them)
- Planning for partnerships with new market entrants
- Technology rollout
- Launch and enablement activities
‘That’s great advice. Before we close off any final thoughts?’
Retailers willing to embrace the new regulatory changes will be well placed to proactively address emerging CDR opportunities and seek first-mover advantage. With defensive, focused innovation, businesses could explore the creation of ground-breaking products and models, intra- and inter-sector partnerships, multi-sector aggregation play, and customer/community-led idea incubation. This could attract new clients and help reduce cost. As attractive as this sounds no energy retailer will gain many new clients if they are irresponsible with their clients data. Don’t delay, get your action plan in place to ensure that you not only meet your regulatory requirements but the lofty standards of the customers you want to keep.
Looking for more information on the topics raised in this blog or needing help on Integration or API programs then please reach out to firstname.lastname@example.org