Action Initiation has long been touted as the second and major phase of the CDR. With the passage of Action Initiation legislation in the Senate on 15 August, the common questions now are what is it and how can I get started? This article deep dives to explore that.
What is Action Initiation?
Australia’s Consumer Data Right (CDR) is evolving with the introduction of Action Initiation, a framework that allows third parties to take actions on behalf of consumers with their consent, such as:
- Account switching
- Account opening
- Account closing
- Payments management
- Updating customer details.
These new capabilities are poised to enhance consumer control, drive innovation and necessitate a nuanced regulatory approach.
Action Initiation is specifically industry-agnostic, meaning that while there will be some prioritisation within capabilities or industries, it is designed to operate across the economy. Simply put, account opening isn’t just for energy – it’s for other industries too.
CDR regulatory perspective and Action Initiation
From a regulatory standpoint, Action Initiation introduces new challenges and responsibilities. The framework allows third parties to initiate actions only with explicit consumer consent, ensuring that the consumer remains at the centre of decision-making. The Australian government, through the Treasury’s consultations, has emphasised the importance of a robust accreditation process. This ensures that only qualified entities can send action requests, safeguarding against potential misuse.
Minister Stephen Jones highlighted on 9 August that the Action Initiation Bill, currently in the Senate, is crucial but will require additional work to determine the specific actions that will provide value to consumers, with energy account switching identified as a priority use case.
Business impact: a new avenue for innovation
For businesses, Action Initiation offers a new frontier for service delivery and customer engagement. Companies that become accredited Action Initiators can provide value-added services that streamline and enhance consumer experiences. For instance, an energy company could automatically switch a consumer to the most cost-effective plan based on their usage patterns, all with the consumer’s consent.
This capability not only improves customer satisfaction but also positions businesses as proactive partners in managing consumer needs. However, it also introduces competition from tech-driven third parties that can aggregate and manage services across multiple industries. Businesses will need to innovate continually to maintain their competitive edge in this evolving landscape.
Threat or opportunity? It depends if you adopt it or are having accounts switched from you, instead of to you. There is a major opportunity not only for innovation but also for streamlined operations.
Consumer benefits: empowerment and convenience
For consumers, the introduction of Action Initiation means greater convenience and control. By allowing trusted third parties to manage specific tasks on their behalf, consumers can enjoy a seamless and efficient service experience. Whether it’s automatically switching to a cheaper energy provider or updating all their account details in one place, Action Initiation empowers consumers to make decisions that best suit their needs.
Moreover, this framework enhances transparency and choice. Consumers are not just passive recipients of services but active participants who can tailor services to their preferences. With the right protections in place, Action Initiation should lead to more competitive markets, where businesses are incentivised to offer the best deals and most innovative solutions – instead of just relying on retention and being too hard to leave as a strategy.
What needs to happen for Action Initiation to be operational?
With all the noise of new legislation, it’s hard to find a simple answer to this question. We’ll make it simple for you. A few things have to happen:
- Designate actions: The Minister has to designate actions. This was originally expected to be payments to be complementary with NPP, but now all signs are pointing to account switching, specifically for energy.
- Rules frameworks: The Rules are officially approved and signed off by the Minister (currently Stephen Jones) and are drafted by the Federal Treasury, after industry consultations.
- Technical standards: The Data Standards Body currently makes technical standards for the CDR and soon to include Digital ID. They recently concluded an experiment about Account Origination, which Adatree participated in. They set the standards through their decision proposal process which has been in place for years.
- Accreditation changes: Accreditation requirements for who can facilitate an Action Initiation is yet to be determined, whether it is the current ‘unrestricted’ accreditation for CDR, if a higher tier is needed or an entirely new accreditation.
- Other aspects: Other aspects that need to be considered could include privacy safeguard reviews, user testing, regulator changes for accreditation or enforcement, cybersecurity assessments and complementary assessments along with other legislation, including Digital ID, Privacy Act reforms.
- Go-live timing: Once this is all set, there will be a schedule of timing to go-live so those who wish to participate have time to prepare.
The overall timing is unknown but we expect this to be live within 2 years.
Adatree poised to support a future-ready framework
Action Initiation marks a significant step forward for the Consumer Data Right, transitioning from data access to actionable service management. While the regulatory landscape will need to adapt to ensure consumer protection, the potential benefits for both businesses and consumers are substantial.
As the Australian government continues to refine this framework, the focus will remain on balancing innovation with security, ensuring that the CDR continues to empower consumers in a rapidly changing digital economy.
Adatree is committed to enabling these use cases to go live, ensuring that consumers and businesses alike can fully benefit from the capabilities that Action Initiation will bring.
