NextGen’s Tony Carn highlights CDR’s impact on mortgage processes at Fintech Australia Summit

At the recent Fintech Australia Consumer Data Right (CDR) Summit in Sydney, NextGen’s Chief Customer Officer, Tony Carn, offered valuable insights into the evolving landscape of CDR in the lending industry. Speaking on a lending and mortgage use case panel on July 3, 2024, Carn highlighted the insights NextGen has uncovered during its journey with CDR and its impact on the mortgage sector.

As the leading technology provider to the lending industry, NextGen has been at the forefront of CDR implementation. Carn stated, “We’ve integrated CDR consent flow for mortgage brokers as trusted advisers. For two years now, brokers have been generating CDR bank statements that banks readily accept”.

Carn emphasised the superior quality of CDR-generated data compared to traditional methods. “CDR data quality surpasses anything else available. We’re competing against paper and screen scraping, but CDR-generated statements offer unmatched currency and provenance. Lenders can trust where that data originated”.

The benefits of CDR in the lending process are significant. “Lenders typically spend $3,000 processing an application,” Carn explained. “With CDR, they’re seeing substantial time savings – and in this industry, time truly is money. By validating income and liabilities through CDR, lenders can streamline their processes significantly”.

Addressing the current state of data availability, Carn was unequivocal: “We’re absolutely there. Banks are accessing over 99% of data through CDR, outperforming screen scraping. But we need to focus more on the customer – they’ll drive CDR adoption through trust, more than regulation or cost considerations”.

Carn also highlighted CDR’s broader implications: “It’s about brokers guiding customers to become ‘fit for finance’. Tools like Frollo’s Financial Passport summarise expenses, enabling crucial coaching conversations. It’s about preparing people for finance, not just facilitating transactions”.

The importance of data quality in lending cannot be overstated. High-quality data drives decisions throughout the lending cycle, from origination to risk assessment and regulatory compliance. Complete, timely, accurate, and valid data is crucial for regulatory compliance and managing risk. Poor data quality can lead to unfair outcomes for borrowers, such as loan denials or approvals with unfavourable terms. It can also result in inefficient and costly loan processing, potentially causing significant financial and reputational losses for lenders.

Recognising this critical aspect, Carn emphasised, “In lending, data quality is make-or-break”.

However, Carn acknowledged that widespread adoption requires ongoing efforts: “Change management is key. We have hundreds of broker ‘change champions’ using CDR exclusively. Our challenge now is to scale that to thousands”.

Looking to the future, Carn suggested improvements: “We need faster responses to data issues and SLAs. And critically, we need better education and regulation around screen scraping”.

NextGen Open Banking is currently live with two aggregators and available for mortgage brokers in CRM to inform the fact-finding process, better guide product selection and support wider financial discussions. Their solution is also integrated with two major lenders – CBA and Westpac – as well as a number of smaller lenders, allowing mortgage brokers to access Open Banking data within ApplyOnline as part of the application process to streamline home loan applications.

NextGen Open Banking is currently being utilised by over 400 mortgage brokers and has become an integral part of their new business operations. Using Open Banking and a rigorous consent process, data for assets and liabilities is pre-filled into the ApplyOnline application and CDR-generated bank statements are accepted by lenders as supporting documents. Soon, verified badges will be sent to lenders with applications to speed up assessment and approval times.

As the lending industry continues to evolve with CDR, NextGen remains at the forefront, driving innovation and efficiency in the mortgage application process. Our commitment to developing robust CDR solutions and advocating for industry-wide adoption underscores the promising future of CDR in lending. However, as highlighted in the panel discussion, continued education and regulatory refinement will be key to realising CDR’s full potential in the mortgage sector. NextGen is poised to play a pivotal role in this ongoing transformation, helping to shape the future of mortgage lending through advanced technology and data-driven solutions.