‘You can’t borrow your way out of a cost-of-living crisis’: fintech founder on the problem with the government’s approach to open banking

The founder of fintech PocketSmith believes ordinary Australians should be prioritised by the federal government through the Consumer Data Right (CDR) to address cost-of-living pressures.

The call, by cofounder and CEO Jason Leong, follows a record 859 pre-Budget submissions to the Commonwealth Treasury, up from 789 last year, with more than a quarter highlighting the negative impact of Australia’s ongoing cost-of-living crunch. 

The fintech industry’s peak body, FinTech Australia, called on the government to expand the CDR, as well as other initiatives, as it comes up to five years since it was launched as open banking. 

In August 2024, outgoing assistant treasurer Stephen Jones announced a “CDR reset” aiming to simplify the regime, and focus on use cases such as consumer lending, energy switching, and accounting software for small businesses.

Earlier this month, Jones, who’ll leave politics at the May election, confirmed CDR will extend to open finance by including non-banking lenders from mid-2026.

He described CDR as having “the potential to be a transformational piece of economic reform for Australian consumers.” 

But with Jones departing parliament CDR will have a new minister at its helm, regardless of who wins the election.

Borrowing won’t solve ‘cozzie livs’ pressures

With 65,000 Australians regularly using PocketSmith New Zealand-based Jason Leong is keen to debunk suggestions consumers don’t want open banking apps, noting that you can’t manage what you can’t measure.

“With ongoing cost-of-living pressures, nothing is more valuable than having a clear view of where your money is coming from, and going to,” he said.

“Personal financial management is a key use case for open banking. It should be at the top of the Australian government’s list, rather than lending, because consumers can’t borrow their way out of a cost-of-living crisis.”

The PocketSmith app offers forecasting and planning tools to help people manage their finances. It has 320,000 users globally in 190 countries, and Australia being the biggest and fastest growing market, for the Dunedin-based startup.

“Over 85% of our Australian customers have at least one bank account connected to our personal financial management software via open banking. Those accounts are mostly for spending and savings deposits, as well as loans, credit cards, and investments,” Leong said.

Empowering better financial decisions 

PocketSmith has recently published a 27-page white paper titled “The Rise of the Household CFO: How open banking is guiding Australians to financial clarity and control.”

It highlights that personal financial management tasks, such as tracking income and expenses or investing, stand out as high-value CDR use cases, because the benefit to the consumer is broader than handling one-off tasks like choosing a loan or switching energy provider.

“The value of the data is the insights that help consumers learn from past financial habits, tackle current challenges, and confidently plan for a more secure future,” Leong said.

“The potential for lasting impact – throughout an entire lifetime – is immense.”

The white paper identifies digital financial data shared via open banking as a solution for a range of problems that Australians are struggling with, such as multiple accounts, data inconsistency, time constraints, lack of financial literacy, and cognitive overload.

“Household CFOs are just as crucial to financial success as their corporate counterparts. While companies have powerful software tools at their disposal, households are still stuck with outdated methods such as manually pulling data from fragmented sources, cleaning it up, and wrestling with spreadsheets or paper notebooks,” Leong said.

“It’s a time-consuming and manual grind, that not only wastes effort, but also falls short on the essentials like automation, forecasting, and real-time insights,” he added.

The “consumer” needs to be put back into the Consumer Data Right

For CDR to reach its full potential, PocketSmith’s white paper calls out several challenges that must be addressed, including: 

1. Continuing the expansion of CDR across different financial sectors like insurance and superannuation.
2. Raising consumer awareness and building trust. 
3. Training bank staff and preventing misinformation.
4. Improving data quality and consistency.

Despite the consumer being at the heart of CDR’s goals, Leong is frustrated that the voice of the consumer is absent from discussions about what’s working and what’s not, which is why the white paper shares real-life examples from PocketSmith customers.

“When it comes to the success of CDR and open banking, there’s an irony because the consumer’s voice is often missing. Discussions are dominated by financial institutions, data aggregators and businesses enabling open banking, yet the people who stand to benefit the most are rarely heard,” Leong said.