CBA becomes first lender to turn on open banking for brokers

While open banking has been available for years, the roll-out of broker access to the technology has only recently started in earnest and has so far largely focused on data collection. Under the regime, consumers can share their financial information with their mortgage broker (and other trusted advisers) through a secure and government-regulated channel, eliminating the need for insecure password sharing.

CBA has now partnered with technology provider NextGen to enable brokers to utilise open banking data when lodging loans, becoming the first lender to do so.

While the activation has now begun, it will be phasing over to brokers in the coming weeks (starting with those who have already been successful using open banking), with the expectation that it will be available to the majority of brokers by the end of October.

According to NextGen, the CBA partnership is “set to redefine the home loan application experience for brokers, lenders, and customers alike”.

By integrating it in ApplyOnline, NextGen leverages government-regulated data sources to streamline the application process by auto-populating customer data and generating “tailored bank statements, significantly enhancing efficiency”.

NextGen can also pre-validate certain open banking information so that the lender can accept the validation in its approval process and autogenerate and attach bank statements.

It explained that fewer than 15 per cent of all applications are currently approved without the need for additional information post-submission. This results in an average 14-day waiting period for unconditional approval across the industry, causing frustration, incurring staff costs, and creating operational inefficiencies for the 85 per cent of applications that require extra information.

Tony Carn, NextGen’s chief customer officer, said the integration was significant: “CBA’s use of open banking in ApplyOnline marks a transformative leap forward for the mortgage broking industry in Australia.

“This is the step change the industry has been looking for and CBA’s decision underscores its commitment to leadership in technology and customer-centricity.

“Open banking data expedites approval processes, reducing reworks and enabling smoother processing. It also enhances security by minimising fraud risk while preserving the integrity, authenticity and provenance of customer data.”

Michael Baumann, CBA’s executive general manager, home buying, said open banking would benefit both brokers and their customers: “Through adopting open banking for mortgage brokers via ApplyOnline we hope to be able to create a more seamless home loan application experience for our customers and to equip brokers with the tools they need to best support their customers in reaching their home ownership goals.”

How open banking works

Under the Consumer Data Right (CDR), consumers can nominate certain people as their ‘trusted adviser’ (including mortgage brokers, lawyers, accountants, financial advisers, and tax agents) and provide consent for an accredited data recipient (such as a lender) to share data with that adviser.

The trusted adviser model means that the consumer can receive advice or a service without their trusted adviser needing to fall under the same regulatory obligations that apply to data recipients. However, as a matter of best practice, trusted advisers who receive CDR data should ensure that they handle that data transparently and in a way that the consumer would expect.

Currently, brokers only have access to read open banking data (however, the government has been looking at whether action initiation should also be enabled).

Finsure became the first aggregator to officially make open banking data available to its brokers for use in loan applications, after partnering with open banking provider Frollo and lending technology provider NextGen.

The Financial Passport, which can be used by Finsure’s 2,500 broker members (if they are nominated as a trusted adviser), enables brokers to collect customer data – such as their income, expenses, assets, and liabilities – for use in their loan application process.

This aims to not only reduce the time brokers spend on reconciliation and processing applications but also ensure that they’re using bank-verified data as “a single source of truth”, while providing better privacy protection for clients.

NextGen has said it will be undertaking information sessions on the consent flow for brokers in the next few weeks to help educate brokers on how the trusted adviser model works and to outline what a customer sees and is asked to do when granting consent to their broker.

[Related: First aggregator turns on open banking for brokers]