Open banking solution for brokers to launch next year

Following the roll-out of open banking’s trusted adviser model, which came into being in February 2022, consumers can permit particular ‘trusted advisers’ (such as brokers) to access their financial data via the Consumer Data Right (CDR). Once permission has been granted, brokers will be able to utilise open banking data without additional accreditation once their client.

The new NextGen solution offers complete integration into a broker CRM through NextGen’s ApplyOnline, thereby reducing the administrative burden of reconciliation and processing applications. 

Commenting on the new solution, Tony Carn, chief customer officer at NextGen, said: “We saw the opportunity to streamline the mortgage application process with open banking data to help brokers and lenders save time and deliver more value to their customers. 

“CDR is a regulated regime where accredited data recipients can securely access customer data. Information shared through a customer consent can be relied upon as a trusted source in the home loan approval process, and further enables lenders to efficiently verify applications in a robust risk framework.”

Finsure brokers first to access

Finsure brokers are set to become the first to be able to harness open banking data in loan applications from next year after the aggregator became the first broking group to become accredited under open banking and has been building tech to enable its brokers to access their clients’ data when consent has been given.

Working alongside NextGen, the group has been piloting open banking use cases over the past few months and a full roll-out will be launched next year that will enable all brokers to invite clients to share their data.

According to Finsure chief executive officer, Simon Bednar, open banking “solves the problem of data inconsistency and provides transparency across the entire applicant lifecycle”.

“It allows Finsure to build into our CRM platform comprehensive data insight models, which will help brokers make more informed decisions,” Mr Bednar said.

Speaking at a NextGen event last month, Julian Wills, Finsure’s head of governance and risk, suggested that the technology helps eliminate the back and forth between a broker and a consumer when it comes to documentation collation and meets a growing consumer expectation for digital solutions.

He added that open banking also helps protect brokers and aggregation from fraud.

Mr Wills explained: “Open banking is a single source of truth. Ten years ago, you would have to collate all [of] a client’s bank statements and payslips etc but now it’s just tick a consent box and off you go…

“We can gather all of that documentation now with open banking, and because it comes from that original source — there can be no tampering with it. There is zero chance of a problem with the documentation. So it really rules a line from the fraud perspective for the broker — they know the consumer can’t tamper with their financials,” adding this has a large compliance benefit for the aggregation group, too.

Speaking of the Finsure partnership, NextGen’s Mr Carn commented: “We’re very proud to launch our first open banking solution to the Australian broker market, with Finsure as our initial launch partner. 

“In the new year, all mortgage brokers will have access to this solution when using ApplyOnline. So as lenders start to accept open banking data, we are very excited about the opportunities ahead for transforming the lending journey.”

Renee Blethyn, head of broker partnerships at NextGen, added: “Open banking puts brokers as trusted advisers in the driver’s seat when it comes to the opportunities presented by the CDR regime. 

“It gives them the ability to utilise the power of open banking data to inform and enrich the home loan application process whilst maintaining the privacy of the applicant.”

Open banking like a ‘truth serum’

Brokers who have been testing the open banking solution under the pilot have flagged that the trusted adviser access saves both brokers and clients time, and can also improve client engagement.

Nicole Millard from Golden Eggs Investment Services was one of the first brokers enabled as a trusted adviser under the CDR regime and stated: “I am very excited about how much time it will save. Over the years I have observed how little people know about themselves, they really don’t understand their spending habits, they don’t know how much they make, so this solution is like a truth serum in to how I can help a client cut away from the weeds, look at their spending and help them do away with expenses they don’t need. 

“I think that has a serious amount of value … It will allow us to be more accurate and efficient with our service to our customers.”

While open banking has been in place for several years, the first movers are only just beginning to roll out consumer solutions utilising the technology.

Lenders have begun disabling screen scraping in favour of open banking data, while new legislation was recently introduced into Parliament that expands the Consumer Data Right to enable consumers to instruct lenders to initiate actions (including moving bank products on their behalf) and the ecosystem is being widened to also bring non-bank lenders under its remit.

However, given relatively low engagement in the ecosystem, a new open banking campaign has been launched to encourage more businesses to move to adopt open banking, given slow take-up and amid increasingly cyber attacks.

The ‘Commit to Open Banking’ campaign highlights that just 88 businesses have so far signed up to open banking but given that recent cyber attacks and online fradulent activity have made lenders less open to third-party ‘web connectors’ (as they tighten up security and move to the government-backed open banking system), many more will need to come online in order to make the regime mainstream.

[Related: Feedback sought on CDR non-bank lender tweaks]