Open banking: 'there will be winners and losers'

by Madison Utley11 May 2020

With the financial services industry just months from fully transitioning to open banking, an aggregator’s head of digital has urged brokers to take the necessary action now to be ready to leverage the system’s new capabilities into an improved customer experience.

“The open banking train is leaving; if you’re not on board, you’re going to be left behind. There will be winners and losers as a result of this,” said Jason Furnell, Loan Market head of digital. 

According to Furnell, thriving in the new environment is closely linked to what good brokers already do – creating trust.

“Customers need someone they trust to understand how to use and control their data,” he said.

“[Open banking] is a very abstract concept, but mortgage broking is one of those places where it’s very clear: ‘If I have this data, I can use it to my advantage’.”

While the ACCC has worked extensively to ensure open banking is secure, consumers are going to be nervous and will need reassurance that using their data as a tool does not compromise their privacy. 

“We’re finding that no digital communication is better than a broker, in a call, prepositioning that experience with the client,” said Furnell.

“Different groups can add links and buttons for customers to [engage with their data]. But only a broker can create the trust that’s required for a client to go, ‘Yeah, I understand what you’re asking me to do. I understand its benefits. I’ll do it. I’ll click that button and go for it.’”

“It’s going to be a game changer.”

Under the new system, consumers’ data will become an asset they own and are able to use to their advantage, enabling the mortgage process to become smoother and more comprehensive.

“Open banking will help customers track their spending and analyse their spending patterns. It will help them compare mortgages on the fly – potentially automatically,” Furnell explained.

“Yes, clients can already look at their statements in internet banking now, but it will be easier, better, safer – for your clients and for you – to get the data needed to create a great client experience and build more efficiencies in your business.

“If you’re not fluent in this data today, you’re not going to be ready when it actually hits.”

The new system will also enable brokers to step up their ongoing servicing and do more for their customers beyond the initial transaction. 

As explained by Loan Market, open banking shifts the conversation from ‘What have you been doing?’ to ‘I’ve seen what you’ve done and I’ve got something I think can help' when a broker follows up with a client one year after settlement.