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Broking industry leaders have outlined why open banking adoption among brokers remains limited and what they would do to boost uptake.
Leaders from the broking and banking industries have had their say on how a lack of awareness is holding back open banking adoption among mortgage brokers.
At a session on the Consumer Data Right (CDR) transition in mortgage broking at the CDR Summit in Sydney on Thursday (17 July), Teachers Mutual Bank’s chief data officer Ben Ruming said he felt the industry was “at a precipice” on open banking.
“We’re five years in. We’re kind of talking about the same use cases. It’s about the quality of the data. It’s about how fast we can make it. I’d like to see the standards evolve,” he added.
“I think it’d be really good to have a practical lens from the standards body about what really is going to change the dial. Because I’d love to be sitting here and not talk about 4 per cent of our members using the service but more like 45 per cent or higher.”
Technology provider NextGen last month commissioned research that found that while open banking is gaining traction across Australia’s financial services industry, adoption among mortgage brokers has been muted despite the potential benefits.
Currently, brokers are able to access financial data from consumers when permitted to do so through the ‘trusted adviser’ model.
By harnessing open banking to pull this data, brokers can accelerate the loan approval processes by reducing the time for documents to be collected and verified.
NextGen offers brokers access to open banking features through its open banking platform provider Frollo and via its lodgement system ApplyOnline;, however, just 18 per cent of brokers have adopted the open banking features available through the platform.
In response, NextGen’s head of broker partnerships, Renee Blethyn, told the panel that the company had rolled out educational programs to improve uptake, including webinars, help centre articles, and how-to guides. NextGen also trains its franchise development managers in open banking, as they are the first hands-on support for brokers.
Kevin Quach, principal broker partner at MLS Finance, said he uses NextGen’s open banking tools and said they had been a “gamechanger” for the brokerage.
However, despite efforts to boost open banking education, Quach said he felt a lack of awareness was holding back adoption among brokers and their clients.
“Most people don’t know what open banking is and the benefits it provides. You know, no one wants to give banks 12 months’ access to their data. So that’s probably the main sticking point,” Quach added.
“But once we have that conversation, explain what open banking is and the benefits it provides and also allude to the fact that the alternative is you can manually download PDFs, send me some screenshots… it becomes a much easier conversation after that.”
Boosting open banking broker usage
The panel’s chair, Naveen Ahluwalia, executive, policy and legal at Mortgage and Finance Association of Australia (MFAA), asked panellists which one change to the CDR regime could accelerate broker usage.
NextGen’s Blethyn answered: “You’ve got to have better lender adoption because lenders actually changing their policies will absolutely drive the [right broker] behaviour.”
MLS Finance’s Quach agreed, adding that increasing awareness would boost uptake the most.
Nicole Devine, executive general manager, product and technology at Mortgage Choice, said: “Definitely lender adoption, but I do think forcing functions like legislative changes around screen scraping is just not secure.”
Finally, Ruming added he would go one step further and wanted “end-to-end, no hands, applications for credit, including action initiation”.
You can find out more about how brokers are using open banking and the tools available through NextGen in the In Focus podcast.
Tune in to the episode with Renee Blethyn, head of broker partnerships at NextGen, to find out more:
[Related: Open banking still not widely adopted by brokers: NextGen]
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