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The broking industry should be embracing open banking, as its themes and end goals “exactly align” with the end goals of mortgage brokers, the head of customer experience at a major broking group has revealed.
At the beginning of August, a new law passed both houses of Parliament that enables individual and business consumers to access their own data with accredited entities such as banks, telcos, energy companies and third-party individuals such as brokers to get tailored access to services and competitive deals.
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Three of the four major banks voluntarily launched the first stage of the Consumer Data Right (CDR) on 1 July, with the next stage (due before February 2020) to involve the full rollout of access to consumer account and transaction data for credit and debit cards, deposit accounts and transaction accounts before extending out to mortgages later that month.
Speaking at Loan Market’s Game On conference in Tasmania last week, Loan Market’s chief customer experience officer, Jason Furnell, outlined that the CDR and open banking should be adopted by the broking industry and seen as an “opportunity” for the industry, rather than a disruptor, given the synergies between the two areas.
How brokers can discuss open banking with clients
Mr Furnell said that, as well as lenders, broking groups and brokerages should be at the forefront of embracing open banking as it helps provide brokers create even closer relationships with their clients.
He explained: “Essentially, it’s a personal finance manager that aggregates [consumer] spending habits across multiple accounts for banks, if they give you permission to access it. So, this is an interface that [brokers] can use every day, and we can access account information about clients, such as their account transactions, their current rate, we can see their funds, and then we can maybe move funds in future, and we can understand the products they’ve got and [see if there is] a better range of products available for them.”
Mr Furnell suggested that it is therefore intrinsically important that brokers understand open banking now and help consumers prepare for it.
According to the Loan Market CEO, the messaging that brokers could be telling clients could be similar to the following: “First of all, I’m going to help you understand the space. I accept that this is your data. And we’re going to use it and protect it. I’m going to give you control of what’s happening and I’m going to be honest about how we’re using it,” he outlined.
He added: “This opportunity is a huge opportunity for the broking industry. And it’s time for us to get match fit and earn the right to play in this future.
“There will be winners and losers out of this change. And I think it’s actually a mindset challenge around are we going to embrace this? Are we going to lead? Or are we going to ignore it? That’s important,” he said.
Aside from aggregating data, Mr Furnell added that the consumer data right was “brilliant for brokers” as it meant that “clients that give you the data trust you to find the right solution for them and then you make it happen”.
But he noted that this provides data sharing through a much higher security levels, such as Face ID or fingerprinting technology.
Acknowledging that brokers already receive client information through bank statements and data scraping technology, Mr Furnell suggested that open banking will streamline this process through standardisation.
“It eliminates the sharing of passwords and usernames [and it provides users] with the visibility that [they] can revoke [at any time]. And it’s not that only a select few have a view into a bank, like it is at the moment, this will open it up.
“It amps up the security levels,” Mr Furnell said, “so it’s an easier client experience [that is also] more secure, automated and friendlier.”
“It really is something that changes the way that we manage and operate and interact with consumers and the way we pull that data.”
He continued: “The truth is, no one is in a better position to guide consumers through this change than [brokers] because [they] have trust. Clients already share huge amounts of data with [them], in a very clumsy way, so onboarding people into this and planning how to use it will become key.”
Mr Furnell concluded: “There are four things that are representative of the ambitions of open banking, and these exactly align with what we’re trying to do. It’s about: customer power, increasing competition, being fair and transparent, and creating opportunities that don’t exist today.”
Find out more about how you can prepare for open banking and use customer data more effectively in The Adviser's live webcast on open banking and data, which will be streamed online at 12.30pm on Wednesday, 21 August.
Join The Adviser and a panel of mortgage industry innovators for a free, live webcast about how the data you already have can be harnessed to create closer client relationships, the ins and outs of open banking and the top tips for ensuring the data you collect is secure.
Industry experts Stephen Moore, Salem Lassoued and Marcus Cann will reveal how open banking will impact your work, how to protect yourself from data thieves, and the innovative tools and strategies brokers can use to collect customer data.
Register for The Adviser Live webcast “How to harness your data to create a goldmine” here.
[Related: The Adviser Live – Responsible lending series: How to harness your data to create a goldmine]
