New research has shown lenders are turning to consent-based data sharing to tackle mounting mortgage fraud risks.
NextGen’s new Australian Lending Technology 2026 white paper has found that lenders are racing to replace manual document checks with open banking data feeds, as concerns over forged income documents and AI‑driven scams sharpen the focus on mortgage fraud.
Fraud fears meet data reform
The report – based on executive interviews, a survey of 132 Australian lending professionals, and desktop analysis of regulatory and industry trends – concluded that traditional document-heavy processes were no longer fit for purpose in a market where fraudsters could manipulate payslips and financials.
Manual processing inefficiencies were cited as the most significant operational challenge, with 48 per cent of organisations nominating them as their biggest pain point.
At the same time, lenders told NextGen that open banking and the Consumer Data Right (CDR) were emerging as critical tools to close these gaps.
A total of 88 per cent of lenders said they were looking to use open banking for income verification, with 73 per cent flagging it as essential for fraud detection and risk management, and 70 per cent nominating expense verification as a key use case.
Open banking’s fraud-fighting edge
Under the CDR framework, customers can consent to share their banking data directly from financial institutions to lenders via secure APIs, replacing emailed PDFs and scanned payslips. This includes in broker-lodged applications (under the 'trusted adviser' model).
The white paper outlined that this can have profound implications for both speed and integrity in mortgage decisioning, due to the fact that it considerably reduces the scope for falsified or doctored documents to slip through.
By plugging these data streams into credit workflows, lenders could cross-check declared income and expenses against verified transaction histories and account behaviour.
According to the report, lenders view this as a way to strengthen responsible lending, with faster approvals (63 per cent), streamlined refinancing and switching (53 per cent), and even more tailored product recommendations (20 per cent) flowing from the same data foundations.
However, open banking take-up has been slow in the mortgage process - with several issues relating to user error when it comes to setting up open banking feeds.
Chief financial officer at NGM Group, Richard Burton, said the shift underway was about using external data alongside customer-supplied information at every step of the mortgage process.
“You make sure you leverage the information and the data that’s out there alongside the information and the collection that you get from a customer,” he said.
Burton went further and said that a complete, multibank view of a customer’s finances allowed lenders to deliver better outcomes.
“When you can see someone’s complete financial position through Open Banking, you can look across the market and help those customers to get a better financial deal across all their different financial products,” Burton said.
‘Worst of both worlds’ without data
NextGen chief customer officer Tony Carn said the industry’s reliance on documents was leaving many badly exposed just as fraud becomes more sophisticated.
“Manual verification of documents is slow and vulnerable – it’s the worst of both worlds for brokers right now. They’re under pressure to verify legitimacy, but falsified payslips and doctored statements are increasingly sophisticated,” he said.
“The key to fraud prevention is getting reliable data from the source.”
Carn said NextGen was trying to hard‑wire that shift into everyday workflows through its ApplyOnline platform, which blends identity verification, fraud analytics, and open banking feeds.
“What that means for brokers is they’re not left guessing whether a payslip is legitimate, or a bank statement’s been doctored,” Carn said.
He said that open banking under CDR created a “direct chain of trust” between source accounts and credit decisions.
“You’re seeing actual transaction data direct from financial institutions, not second-hand documents that can be manipulated. Using AI technology, this helps identify income, expenditure, and suspicious transactions, giving brokers both comfort and security in their data source,” he said.
Carn stressed that the benefits extended beyond turnaround times and would provide genuine protection for all parties involved in a loan.
“It’s not just faster verification – it’s actually more secure, and it gives brokers genuine confidence in their data source. It’s about protecting brokers as much as it’s about protecting lenders,” he said.
Australia’s expense verification problem
The report highlighted that open banking may be most transformative in Australia’s strict expense verification environment.
Current rules mean customer-declared living costs must be tested against actual spending patterns, often resulting in repeated requests for updated statements.
The white paper noted that CDR-enabled data streams effectively automated the matching process – pulling through granular, categorised transaction data in real time.
This was described as particularly significant for Australia as it would reduce the need for multiple rounds of manual follow-up and provide assessors with a more accurate view of a household’s true cost base.
Burton characterised the broader transition as a replacement of paper with APIs across the mortgage life cycle.
“We’re increasingly seeing the information gathered manually from customers being replaced by data and APIs for each step of the mortgage journey,” Burton said.
CBA scandal sharpens focus
The recommendations come as the Commonwealth Bank of Australia (CBA) investigates up to $1 billion in suspected fraudulent home loans, some reportedly involving forged or AI‑assisted income documents.
The bank has referred the matter to police and regulators after whistleblowers raised concerns about doctored income statements provided by “several accountants” to brokers, which were written through both the broker channel and the bank’s controversial introducer program.
ASIC has confirmed it is now making compliance inquiries into the issue.
Competitive pressure to move
NextGen’s report concluded that lenders that treated open banking integration as a strategic priority would gain a tangible edge in both fraud control and turnaround times.
It described the combination of faster processing and stronger decision quality as a “competitive differentiator and a responsible lending enabler”.
It also suggested that laggards may face growing scrutiny from regulators and distribution partners as higher-integrity data eventually became the norm.
The white paper called on lenders to move beyond minimum CDR compliance and to fully embed consented data into origination, verificationm and ongoing portfolio monitoring.
[Related: ASIC confirms it is investigating CBA loan fraud]
