In September, 10.1% of all loans lodged through NextGen’s ApplyOnline platform used open banking. Across the wider system, active authorisations under the Consumer Data Right (CDR), the framework that lets consumers share their banking data with accredited providers, reached 1,347,328 in June. Consent volumes have grown 4.83 times in two years.
The report points to tangible gains for lenders that have built the data into their processes. Beyond Bank Australia, the first branch-based lender to bring open banking into its branches, is turning applications around 50% faster than under its previous process.
Beyond Bank chief operating officer Wendy den Hartog (pictured left) said attitudes across the industry had shifted from treating open banking as a compliance exercise.
“Now it’s no longer whether it’s something that you want to adopt. It’s about how quickly organisations can take the services and embed them into core lending processes,” she said.
Data quality has improved markedly over the past year, the report found, but getting clients through the consent process remains the biggest hurdle. At three of the largest banks examined, about two in three abandoned consents occurred in the first two steps, when consumers identify themselves and complete authentication.
Business borrowers face the toughest path. Manual nominated representative processes drive drop-out rates of 50% to 60%, compared with just 3% on consumer lending applications run through Verifier.
“We’re finding CDR fantastic. It’s working really well for Verifier and its consumer lending customers, we just need the same for business consumers,” said Verifier founder and chief executive Lisa Schutz.
Modelling by Lateral Economics for FinTech Australia found three policy changes could add $1.2 billion a year to the economy by 2035: keeping smaller banks in the CDR, introducing third-party disclosure consent, and simplifying nominated representative arrangements for businesses. Frollo opposes a proposed exemption that would let smaller banks leave the CDR. The Mortgage & Finance Association of Australia (MFAA) has also opposed any exemption that would reduce the number of lenders in open banking.
The report also found that verified bank data is becoming an important safeguard as AI makes financial documents easier to fake. Document fraud is already on the industry’s radar, with the MFAA’s new guidance on referral relationships warning that fraudsters posing as referrers may supply false documents.
Frollo’s head of open banking markets and compliance, Tony Thrassis (pictured right), said the debate has shifted to how fast the benefits can be extended.
“The foundations are in place, and the momentum is real. The question is no longer whether open banking works. It’s how quickly we can make it work for everyone,” he said.
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