Non-bank lender CDR insertion ‘supercharges’ the platform

With CDR’s ‘open banking ecosystem’ extended to include non-bank lenders, the upshot in the third-party broker space is an even greater variety of loan options and increased competition amongst lenders, in turn – and in theory – benefitting borrowers.

Speaking exclusively to The Adviser, Frollo chief customer officer Simon Docherty outlined the benefits for fintechs in the mortgage arena and the additional value it provides lenders.

“We expect to see an accelerated take-up of CDR data used in the mortgage lending space in 2023,” Mr Docherty explained.

“The ability to share that data digitally through a secure and regulated system like CDR is quickly becoming a high priority for banks and lenders.

“This will lead to better tailored products for consumers and faster applications for lenders,” he stated.

“It’s also opening new ways for fintechs like us to provide additional value to lenders in the mortgage application process, such as new insights relevant to the loan applications, that can only be derived from the quality data that comes from CDR.

“Whilst we acknowledge there are still some challenges with open banking that are being addressed, CDR in Australia is incredibly ambitious and a huge opportunity we are very excited about.

“New data sets like ‘open energy’ and non-bank lenders are set to supercharge the platform using the open-banking-built ecosystem,” he added. 

The positive reception to the non-bank CDR admission news was mirrored by the mortgage broking industry’s peak bodies.

Mortgage and Finance Association of Australia (MFAA) chief executive officer Anja Pannek commented: “In our view, open finance combined with open banking provides a richer overview of a customer’s financial health, which will allow brokers to better match customers’ needs and objectives with products.

“Therefore, we are pleased that treasury has designated the expansion of CDR to the non-bank lending sector.”

The Finance Brokers Association of Australia (FBAA) managing director, Peter White, commented: “The FBAA has been actively consulting with government and the regulator on the proposed outcomes of CDR and specifically supporting its expansion into the non-bank sector – fair’s fair, they need to be a part of this and not just left in the hands of banks.

“The proposed expansion of CDR into the non-bank sector will be great for brokers as this will assist to ensure that which is in the best interests of the borrower are fairly and transparently played out and not just forced into the hands of banks because borrowers just want the CDR capabilities. 

“We need to embrace the future as an industry and ensure borrowers have access to the latest tech and the most secure means of getting a loan in the quickest possible time whilst ensuring their best interests and responsible-lending practices and obligations are all compiled with. “Here’s to the future!

“Let’s embrace this and aim for 80 per cent market share originated by brokers,” Mr White concluded.

Finetuning and tweaks still to come

Assistant treasurer and minister for financial services, Stephen Jones MP, formally confirmed the Consumer Data Right (Non-Bank Lenders) Designation 2022 ‘instrument’ had been made on Wednesday (30 November).

Against the backdrop that Australian consumers “deserve to have their data working for them, securely and safely,” the assistant treasurer made the announcement that the Labor Government was now “designating the expansion” of CDR to the non-bank lending sector.

As the minister outlined: “The consumer data right gives consumers power over the data their service providers collect, enabling them to shop around for a better deal.”

“It uses enhanced data security, combined with a consent-driven, data-sharing model to quickly and securely match individual needs with the market offering that best suits them.

“CDR’s ‘open banking ecosystem’ is already empowering bank customers.

“We expect new and existing mortgage holders will benefit with access to better-tailored, more competitive deals,” Mr Jones stated.

The minister added that with CDR in the energy sector, and soon to be rolled out to medium-sized energy providers and telecommunications providers, Australian consumers will have “more ways than ever to take control of household expenses.”

The Non-bank Lending Designation Instrument can be found on the federal Register of Legislation website, the government confirmed.

“The government will shortly commence consultation with industry and government stakeholders on the development of rules and data standards for the non-bank lending sector,” the assistant treasurer explained

[Related: Mortgage broking ‘under threat’ from disruption: Broker]