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The mortgage technology provider has tapped into open banking data, which will power its single-click refinancing tool to launch later in the year.
Sherlok has become the country’s first representative under the new Consumer Data Right (CDR) principal access model – securing a pathway to open banking data through its partnership with data intermediary and fintech Adatree.
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The access model is a recent amendment to the CDR legislation, allowing unrestricted data recipients, such as Adatree, to act as principal to other companies wanting access to data.
Under the partnership, Sherlok, which offers an automated repricing and refinancing tool for mortgage brokers that monitors around 35,000 home loans, will receive data in real-time.
Sherlok chief executive and founder Adam Grocke told The Adviser that tapping into live data will allow the system to offer brokers live insights across product rates and customers’ data – promising to improve customer outcomes and retention.
“It means that we can, 24/7, monitor their interest rate, we can look for patterns within that consumer’s data to better predict if they’re going to leave,” Mr Grocke explained.
The access to open banking data underpins a new single-click refinancing offering from Sherlok, which is expected to launch in the second half of the year.
The product will be trialled with brokers before it is rolled out into the market, Mr Grocke told The Adviser. The company is currently working with lenders on the product.
Sherlok has aimed to squeeze the refinancing time frame from a matter of weeks to minutes, through the use of data, analytics and artificial intelligence.
Mr Grocke believes the tool will “reshape the industry”.
“At the moment, to get to a credit decision, typically it can take anywhere up to three weeks, on average for lenders to get an unconditional approval. What we’ll do, is work to bring that back to an instant credit decision,” he said.
“It’ll be an instant credit decision, which will flag it as unconditionally approved for the broker, for the customer, as soon as they click the button, which is to switch lender and then they can actually choose their settlement date thereafter.”
By becoming a representative with Adatree, Sherlok will also skip the time, cost and effort required to access CDR data if it had sought its own data recipient accreditation.
Mr Grocke told The Adviser the company had considered the data recipient route initially, 12 months ago, when it saw the potential for mortgage brokers to use customer data under the CDR scheme.
“What we saw was that the legislation was constantly changing. So we would need to have potentially a consultant or an internal team that would be managing constantly our requirements as an accredited data recipient,” he explained.
“The cost and process to get that data recipient status was actually going to be anywhere between $150,000 to $300,000 in costs and it was going to take between six to 12 months to do that.”
Instead, Adatree is essentially sponsoring Sherlok’s access to the CDR, shouldering the costs and compliance obligations – and allowing the refinancing tool provider to access open banking data within a matter of weeks.
“The main benefit for us and other businesses looking to do that is it makes it more accessible,” Mr Grocke said.
“And if it’s more accessible for fintechs, to adopt open banking and CDR, there’s going to be more traction for consumers to consent to sharing their data.”
Jill Berry, CEO and co-founder of Adatree echoed Mr Grocke, noting the process to participate in the CDR is “very lengthy and complex”, with “high barriers to entry”.
“Hundreds of companies are registered as interested in becoming data recipients, but are yet to start the process,” Ms Berry said.
Senator Jane Hume, Minister for Superannuation, Financial Services and the Digital Economy also weighed in, commenting the industry has taken the new principal access model weeks after it was formalised.
“Greater adoption of the CDR means better, cheaper and more bespoke products and services for consumers and businesses alike,” she said.
[Related: Broker feedback wanted on ‘complex’ financial services legislation]
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