How to use CDR Insights with TrueLayer

CDR Insights are set to be one of the most useful elements of open banking.

consumer data rights
CDR Insights is a new data access model available from 1 February 2022 that will allow open banking data under the Consumer Data Right (CDR) to be used much more widely and by many more parties. In fact, we think CDR Insights will be one of the most convenient and useful elements of open banking, especially in the payments space. This is because CDR Insights can be used in Australia for bank account verification and validation, areas that we already know from our experience in Europe and the UK are incredibly powerful for businesses of all types.As an example, a third party, such as a conveyancer or a bookkeeper, might want to check the bona fides of a payee’s bank account before making a payment. The CDR Insights model permits TrueLayer, as an Authorised Data Recipient (ADR), to request confirmation from the payee’s bank, with the payee’s consent, that the account is held in the name of the expected payee and to share that insight back to the third party. The CDR Insights model shares insights, rather than the actual raw data. These low risk insights can be hugely beneficial to a wide range of businesses. Another example is verifying there is enough cash in an account – all via a simple ‘yes or no’ and without actually handing over any sensitive information to the third party. To find out more about CDR Insights, as well as the other latest access models, read our own insights here.

Bank account verification reduces failed payments and fraud

Being able to verify payments using open banking APIs will be a step-change in Australia's payments framework, ending dishonour fees by allowing merchants to check before taking a payment whether there is money in an account and reducing delayed payments and the administrative legwork required to chase them up.However, because CDR Insights is so new, the consent process is still being optimised in Australia – it will take a little more time to reach the streamlined, low-friction outcomes currently enjoyed in the UK and EU.Our UK verification tool is an example of what we plan to make possible in Australia: it verifies 90% of good actors in just three clicks and accelerates AML (anti-money laundering) and KYC (know-your-customer) checks by allowing consumer to confirm they own the account using a simple fingerprint or faceID. Automated checks through a single API reduce the amount of time compliance teams spend on manual checks, while at the same time reducing instances of fraud and chargebacks.

The biggest game changer is direct debits

In Australia, we believe the most powerful use of open banking verification via CDR Insights is set to be direct debits.In 2021, the number of direct entry payments (direct debit and direct credit) hit 3.3 billion with a total value of $14.2 billion, according to Reserve Bank statistics. Direct debits make up 25% of the total value of all non-cash payments. Yet they also come with a failure rate as high as 20%, due to incorrect account details or the payee not having enough money in the bank – and dishonour fees between $5-35 a time. This is where CDR Insights comes in. Once processes such as consent have been fine-tuned, merchants will be able to automate checks to verify both the account details and, later on during each payment cycle, confirm ahead of time that a consumer has enough money in the account to pay. If the cash isn't there, the merchant can proactively warn their customer to make sure they have enough funds.

Bank account validation for fast customer onboarding

Our other key use case is validation, or making sure the account number you have is valid.With CDR Insights, an ADR like TrueLayer can do that validation via a single API using some basic details which allow a consumer to quickly confirm their account with, say, a rental agency or a share trading platform. Not only does this reduce the risk of errant payments, but it also offers another unique opportunity: innovation. Our UK validation tool has opened the door to innovations that allow consumers to link a range of accounts from different banks and apps in one location to have a unified view of their finances. It's led to increased personalisation with target advice based on actual financial data, higher engagement, and all in real time. CDR Insights are about to fundamentally change how we do payments in Australia. By starting with small details like name checks and balance checks, we expect this to snowball into greater levels of innovation. Moreover, in the future when open banking payments arrive in Australia, we will be able to combine all of these CDR benefits into one powerful payment initiation product. Contact us to learn more about how you can work with TrueLayer to harness the power of CDR Insights in Australia.
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