Australia Consumer Credit Market: Lending Trends, Digital Finance & the Transformation of Household Borrowing

The Australia consumer credit market is experiencing growth, driven by increased consumer spending and confidence. The demand for both secured and unsecured credit is rising, influenced by low interest rates and flexible lending policies. However, economic uncertainties and financial pressures on certain sectors may affect credit stability.

Australia's consumer data right (CDR) has been pivotal in promoting transparency and competition in the financial sector. In March 2025, the government expanded the CDR to include non-bank lending institutions, effective from mid-2026. This reform is designed to empower consumers with greater access to their financial data, enabling them to compare credit products more effectively. By allowing consumers to share their financial information with different lenders securely, the CDR fosters increased competition and drive better product offerings in the credit market. The expansion of the CDR in 2025 is a key development aimed at transforming the credit market. By including non-bank lenders, the reform broadens the scope of data portability, allowing consumers to access and share their financial information across a wider range of credit providers. This encourages lenders to offer more competitive rates and tailored credit solutions, fostering a more dynamic and consumer-centric market. Financial technology companies (fintech’s) and non-bank lenders are leveraging this data to develop innovative credit products that cater to diverse consumer needs. By reducing compliance costs for lenders, the reform encourages innovation and competition in the credit market. Consumers can now make informed decisions, secure better credit deals, and benefit from tailored financial products. The expansion of the CDR fosters a more dynamic, transparent, and competitive consumer credit environment, ultimately enhancing financial inclusion and literacy.

How AI is Reshaping the Future of Australia Consumer Credit Market

• Revolutionizing Credit Scoring and Risk Assessment:

Machine learning models analyze alternative data sources beyond traditional credit histories, enabling financial inclusion for thin-file consumers and reducing default rates by 15–20%.

• Enhancing Fraud Detection and Prevention:

AI systems monitor credit transactions in real time, identifying fraud with up to 95% accuracy and helping reduce Australia’s AUD 2.7 billion fraud losses.

• Automating Credit Decisioning and Approval:

AI reduces loan processing from days to minutes and ensures compliance with responsible lending obligations under the National Consumer Credit Protection Act.

Australia Consumer Credit Market Trends & Growth Drivers

BNPL services are reshaping consumer credit dynamics as mainstream alternatives to traditional lending. The BNPL market reached USD 268.8 Million and is projected to grow to USD 1,915.7 Million, with 18% YoY transaction growth. The Responsible Buy Now Pay Later Act brings BNPL under full regulatory oversight from June 2025, forcing providers to secure credit licenses and adhere to responsible lending standards. Providers like Afterpay and Zip are investing heavily in AI for fraud prevention and risk scoring.

The Consumer Data Right (CDR) revolutionizes credit accessibility by enabling data portability across the Australian financial ecosystem. Over 530,000 Australians used Open Banking products, with 582 million data requests. Mandatory CDR participation for non-bank lenders by mid-2026 enhances competition and consumer choice. Major banks like Commonwealth Bank and Regional Australia Bank are using CDR for AI-powered decisioning and personalized lending.

Economic pressures and regulatory enforcement are reshaping credit behavior in Australia. Higher interest rates have reduced mortgage activity and pressured household budgets. ASIC is enforcing stricter lending oversight, especially around AI-driven decisioning. Rising NPAs across major banks are leading to wider adoption of AI early-warning systems. Australians lost over AUD 2.7 billion to scams, increasing demand for secure, verified credit processes.

Recent News and Developments

November 2024: BNPL providers now require Australian Credit Licences under the NCCP Act, effective June 2025.

October 2024: ASIC released Regulatory Guide 281 for low-cost credit contracts.

September 2024: FinTech Australia reported 530,000 Open Banking users and 582 million CDR data requests.

August 2024: CDR expansion announced for non-bank lenders by mid-2026.

February 2025: RBA issued its first interest rate cut after 13 hikes, reducing cash rate to 4.1%.

Key players include:

Commonwealth Bank of Australia, NAB, Westpac, ANZ, Afterpay, Zip Co, Equifax Australia, Experian Australia, and other major institutions.