The MFAA has pushed for a lending‑first approach as the federal government designs its new digital identity infrastructure.
The Mortgage & Finance Association of Australia (MFAA) has called on the federal government to make lending and property transactions a priority use case in the proposed Commonwealth Verifiable Credentials Trust Framework.
In its submission to the Commonwealth’s consultation on verifiable credentials policy, the MFAA opened by outlining how deeply brokers are embedded in identity and data processes across home and business lending.
“Throughout the lending process, brokers collect, verify and manage sensitive personal and financial information and frequently undertake identity verification and customer due diligence on behalf of lenders,” the paper said.
“This makes brokers an important participant in Australia’s digital identity ecosystem.”
The MFAA linked this to broader digital reforms, highlighting how open banking and the Consumer Data Right (CDR) were already widely utilised in lending workflows.
The association also framed verifiable credentials as tools that could help tackle fraud risks and overhaul how onboarding and identity checks were conducted.
The submission said the new infrastructure “presents a significant opportunity for verifiable credentials (VCs) and Digital ID to improve customer onboarding and identity verification, reduce fraud and impersonation scams, reduce reliance on insecure document sharing and screen scraping, improve efficiency across the home lending process, and support broader adoption of CDR and digital transactions”.
Lending as an early testbed for VCs
The MFAA recommended that financial services and lending should be treated as an early use case for verifiable credentials as the framework was rolled out.
“Given mortgage brokers support more than 80 per cent of Australians obtaining a home loan and approximately four in 10 small business loans, the MFAA encourages the government to recognise financial services and lending as an early use case for VCs,” the MFAA said.
The submission reinforced brokers’ everyday handling of identity and financial data and said that the conditions that helped CDR take hold in lending also made VCs well-suited to the industry.
The MFAA outlined the benefits it expected if VCs were applied to lending, focusing on both risk and efficiency.
“Using VCs in lending could improve customer onboarding, reduce manual document checks, strengthen protection against identity fraud and reduce the amount of sensitive information businesses need to collect and store,” the paper said.
Call for end‑to‑end interoperability across the property journey
However, the association warned against designing policy that only addressed a single point in the lending journey, saying that consumers would lose patience if they were asked to repeat verification steps for each stakeholder.
To avoid that, the MFAA said that the framework must span the full lending and property transaction life cycle.
It also said that VC policy could not exist in isolation from other major digital reforms.
“The Commonwealth should ensure that the Verifiable Credentials Trust Framework complements other major digital reforms, including the Digital ID system, the Consumer Data Right and the expanded AML/CTF framework,” the paper said.
“Without this alignment, there is a risk that consumers will be asked to verify their identity or provide the same information multiple times to different parties, reducing the efficiency, privacy and security benefits that VCs are intended to deliver.”
The MFAA also highlighted the benefits of a centralised approach.
“An interoperable approach will reduce reliance on manual document collection, support faster access to finance and provide a simpler, more consistent experience for consumers, brokers, lenders and other participants,” it said.
Commonwealth wallet and proportionate settings
Yet the MFAA said that VCs would only deliver their full potential if consumers actively chose to utilise them and cautioned that leaving borrowers to juggle multiple wallets for government‑issued credentials could hamper take‑up.
The association accordingly said it backed a single, trusted Commonwealth wallet.
“Providing a simple, trusted Commonwealth digital wallet will make it easier for consumers to adopt verifiable credentials, build confidence in the system and reduce confusion,” the MFAA said.
[Related: MFAA reveals plan to unlock broker business dynamism]
Want to see more stories from trusted news sources?
Make The Adviser a preferred news source on Google.
Click here to add The Adviser as a preferred news source.
