Australian mortgage brokers pivot towards Open Banking

A shift towards Open Banking is penetrating the Australian mortgage broking industry, displacing conventional screen scraping methods, according to NextGen, Australia's premier mortgage technology provider. The transition comes amid potential legislative changes that may be implemented following an August 2023 review of screen scraping practices by the Australian Government.

Since the launch of NextGen's Open Banking solution, mortgage brokers accessing the service via their aggregator Customer Relationship Management (CRM) system have demonstrated a marked preference change. Tony Carn, the Chief Customer Officer at NextGen, noted, "When Open Banking was first introduced, it was seen as a secondary option. For many brokers, it's become the primary tool, used in 80 to 100 percent of loan applications."

The last half year has shown an increasing embrace of the service, with Carn reflecting that "the number of brokers with access to NextGen's Open Banking has tripled". He added, "With our latest software release, we're reaching over 30 percent of brokers nationwide. It's not just a spike; it's a sustained climb that's reshaping our industry."

Influenced by the Commonwealth Bank's activation of Open Banking in ApplyOnline, other aggregation groups are following suit. First and second-tier lenders are likewise expressing interest in utilising Open Banking within ApplyOnline. Highlighting this trend, Carn added, "This isn't just momentum; it's an acceleration, a drive for innovation that's becoming a hallmark of modern lending."

Several factors have propelled this change. Firstly, Open Banking's government-regulated and controlled processes offer enhanced security, especially in the wake of data breaches. Secondly, stringent controls from lenders in response to security concerns limit the viability of screen scraping. Furthermore, brokers have been instrumental in inspiring consumer confidence and explaining the benefits of Open Banking and the Consumer Data Rights (CDR) framework. Lastly, the maturation of the technology, guided by broker feedback and NextGen's dedication to product enhancement, along with real-time data accuracy and trust facilitated by Open Banking, have played a significant part in industry adoption.

Mary Khatchadourian of Vault Finance affirms the sector-wide sentiment, stating "NextGen's Open Banking has been integral to our business, and its speed and accuracy provide clear advantages. It eliminates back-and-forth with assessors over missing information, streamlining our process considerably." She goes on to add, "We see it all before it even gets to application, making our lives much easier and the process much faster."

The industry's pivot to Open Banking highlights a new era in the Australian mortgage broking domain, driven by technological advances, legislative shifts, and the increasing value placed on consumer data protection and efficiency. This innovative wave depicts how the sector is transforming to meet the needs and expectations of clients in this digital age.