Empowering brokers: How Open Banking and the Consumer Data Right are reshaping mortgage applications

In the ever evolving mortgage lending industry, the broker channel continues to be the channel of choice for consumers seeking a loan, accounting for over 75% of Australia’s new home loan mortgages. With 45% of broker customers being first-home buyers, and this figure poised to grow, the industry is crying out for technological solutions that streamline processes, enhance security, and deliver exceptional customer experiences.

The outdated approach: screen scraping’s inherent limitations

Traditionally, obtaining client financial data for the fact-finding process for brokers and their clients to go through for a mortgage application can be a manual and time-consuming process. Screen scraping technology, long-established in the industry, has been the go-to method for brokers seeking to access client account statements. However, this approach is fraught with significant challenges:

• Security vulnerabilities: Consumers are required to share their personal banking login credentials, a practice that directly contradicts cybersecurity recommendations from government and financial institutions.
• Privacy concerns: The unregulated nature of screen scraping exposes sensitive financial information to potential misuse and unauthorised access.
• Compliance risks: With increasing regulatory scrutiny, screen scraping stands on shaky ground as a sustainable method of data collection.

Enter Open Banking and CDR: A secure transformation

The Australian government has taken decisive steps to address these challenges exploring the possibility of banning screen scraping altogether in the future, shifting to the Consumer Data Right (CDR) scheme. This approach with Open Banking offers a secure, consent-driven mechanism for data sharing that fundamentally reimagines how financial information is accessed and utilised. In the case of the lending context the CDR represents a transformative approach to financial data collection, and when it comes to Open Banking generated CDR account statements the benefits are clear.

Enhanced security

Instead of sharing login credentials, consumers can securely authorise consent to access data

• Direct, secure data sharing with explicit consumer consent
• Elimination of risky login credential sharing
• Compliance with high standards of data protection

Operational efficiency

The days of time-consuming manual processes are significantly reduced. Open Banking generated CDR Account Statements deliver:

• Lightning-fast processing through automated, real-time access to verified financial information
• Seamless document collection that cuts administrative workload
• Instant verification that transforms workflow efficiency

Improved customer experience

At the heart of Open Banking and CDR technology is a commitment to simplicity and trust:

• A transparent data sharing process that puts customers in control of their data
• Accelerated loan application processing
• Building deeper customer confidence through a secure, regulated data exchange mechanism

Real-world success: A case study in innovation

Connective, Australia’s leading aggregator for mortgage, asset finance, and commercial brokers, provides a compelling example of Open Banking technology’s potential. By early adoption of Open Banking enabled solutions, they’ve successfully helped their broker network reduce manual processing and enhanced their operational efficiency.

The implementation of Open Banking technology has enhanced the CRM workflow for Connective brokers, allowing brokers to access financial data with improved speed and accuracy.

Traditionally time-consuming manual data entry has been replaced by secure, instant retrieval of financial statements and spending patterns, resulting in improved broker and client satisfaction.

“Brokers and their clients deserve a secure, compliant, and seamless data-sharing experience. With Open Banking and the Consumer Data Right, we’re eliminating the risks of screen scraping while ensuring brokers can access accurate financial information in real time.” – Renee Blethyn – Head of Broker Partnerships, NextGen

The future is open: Embracing technological evolution

As the mortgage lending industry continues to evolve, financial institutions and brokers who embrace Open Banking technology are ultimately positioning themselves at the forefront of innovation. The transition from screen scraping to CDR account statements is not just a technological upgrade – it’s a strategic imperative.

The era of screen scraping is drawing to a close. Open Banking and CDR account statements offer a robust, secure, and efficient alternative that protects consumers, empowers brokers, and sets a new standard for financial data exchange.

Are you ready to transform your mortgage lending approach? Speak to your aggregator about their plans to integrate NextGen’s Open Banking in their CRM platform.