All of Australia’s major banks are now sharing their customers’ loan and repayment histories with credit bureaux, with CBA the final of the four to join in on the new system just last week.
The move to open banking comes with many benefits for consumers: the creation of better products, wider understanding of what's on offer across institutions, increased accountability pushing banks to earn customer loyalty rather than assume it, and the ability for young people to develop a positive credit report through good behaviour.
However, lenders having a comprehensive view of consumers’ outstanding liabilities – from credit cards to mortgages or personal loans held at other institutions – without needing to rely on accurate reporting in their home loan applications, could make it additionally challenging for low income earners or first home buyers to be deemed serviceable.
According to Paul Wiebusch, Deloitte Australia’s open data lead partner, “Mortgage brokers have an opportunity to leverage a position of trust to help consumers unlock the value that can come from their data.”
“Someone that can help [borrowers] understand the complexities of the decision [they’re] making is really providing a valuable service,” he added.
Surveys have shown the severe lack of consumer understanding in regard to open banking, creating a unique opportunity for brokers to step into the gap and help their clients understand and claim the benefits afforded by the new system.
According to Stuart Stoyan, founder and CEO of MoneyPlace, “Brokers need to be aware of the changes that are going on.”
Just as they came to embrace and incorporate non-bank mortgage products into the solutions they make available to their clients, brokers need to take the necessary steps to capitilise on open banking.
“From a broker perspective, open banking brings new lenders, whether fintechs or other non-traditional banks, who are offering products – mortgages, personal loans, commercial loans, auto loans – that are a viable alternative to ‘traditional’ products," said Stoyan.
“The broker’s role is to be aware these changes are happening and that these products could be best for the customers, and therefore broaden their scope around the products and lenders they focus on.”
By being open minded and receptive to the large-scale changes occurring within the industry through data sharing, brokers can play a huge role in “redefining financial services” while protecting and promoting their clients’ best interests in the process.