Open banking brings opportunities for brokers

NextGen shares what's next at MFAA national conference

Open banking brings opportunities for brokers

Opening banking is continuing to evolve – and the good news for brokers is that there is no additional accreditation required, NextGen says.

NextGen national head of broker partnerships Renee Blethyn (pictured above left) spoke at the 2023 MFAA National Conference about what’s next for industry technology, focusing on open banking.

Held on May 24 and May 25 at ICC Sydney, the conference theme was “Future Matters”.

In her keynote presentation, MFAA CEO Anja Pannek (pictured above right) spoke about Instagram, TikTok and YouTube, noting that these are the social media platforms where brokers’ clients are - and will be in the future.  They are just one of the massive disruptive factors already impacting the industry and the role of brokers, she said.

Artificial intelligence, such as ChatGPT is an example of technology that affects the way that brokers interact with their customers and how they perform their role, Pannek said.

While the role of mortgage and finance brokers will change, the value proposition will remain anchored in “helping people”, she said. Looking forward, brokers have the opportunity to use technology and innovation to deepen their client relationships and start the journey with their client earlier.

Having joined NextGen in 2021, Renee Blethyn shared her passion for open banking, talking about the disruption that it would cause to positively transform the lending process, while enabling brokers to remain a trusted partner to consumers.

“We see open banking as the new way that lending will deliver a great process for lenders to be able to deliver a great proposition for [brokers] but most importantly, a great process for customers,” Blethyn said at the conference.

Open banking is a legislated reform, introduced by the Australian government and launched in July 2020. Its purpose is to give consumers control and ownership over their data and provide a method of sharing banking data with accredited third parties.

It is continuing to gain traction within the industry. Blethyn highlighted a number of open banking benefits at the conference, including accurate and up to date data, less reliance on supporting documents, improved customer experience and improved ‘time to yes’.  She said it also lowered the cost of acquisition and processing for brokers and lenders.

Opportunities for brokers

Recapping some of the points she shared at the conference, Blethyn said open banking provided an opportunity for brokers to continue to strengthen client relationships and lead the way in how information was shared.

It is important that brokers understand that they are recognised as “trusted advisers” within the consumer data right, and that they stay close lenders to understand changes to processes, she said.

“Brokers don’t need to seek any additional accreditation and they have the opportunity (based on the consumer’s authority) to receive the information that’s shared, based on the consumer’s consent,” Blethyn said.

Looking at the current open banking regime and the various roles within it, this puts brokers front and centre and speaks to why a number of brokers are in business, which is to champion the customer, she said.

“If brokers get a really good understanding of what it means to be a trusted adviser and the consent process, I think they have an incredible opportunity to stay well positioned as the trusted adviser for their customer base when it comes to the financial services they help their customers with,” Blethyn said.

As more lenders started to incorporate open banking into their loan assessment process, Blethyn said brokers had the opportunity to consider how they would position the collection of data that consumers could participate in. 

This includes the security aspect and regulatory aspect (the framework is regulated by the Australian Competition and Consumer Commission and the Office of the Australian Information Commissioner), meaning open banking is the safest way for consumers to share their information.

“This gives brokers a great opportunity to lead the way when it comes to servicing their customers – particularly in an environment where everyone is quite sensitive to how they share their data following data breaches that have occurred,” Blethyn said.

Blethyn said it was also important that brokers stay closed to the lenders that they supported. This included being aware of any changes to processes and working closely with lender and aggregator BDMs to ensure that they were well prepared and able to make changes to their own processes, she said.

All authorised deposit institutions (ADIs) within Australia are classified as “data holders” within the consumer data right, meaning they are required to share data. Sharing of data is happening currently, based on the consumer’s consent, Blethyn said.

Any company that’s recognised as a data holder and is required to share the information has a consumer data right policy. Brokers could familiarise themselves with this information to understand what it means for their clients, she said.

Benefits of open banking for consumers

The consumer data right is about giving consumers “choice, convenience and control” of their data, Blethyn said at the MFAA National Conference.

“I believe very strongly that the principles of the CDR align with what I have seen and experienced in this industry that brokers really champion the customer,” Blethyn said. “That is what is at the heart of what the consumer data right is all about.”

Risks of open banking

As technology advances and sharing of information continued to evolve, Blethyn said it was important for brokers and consumers to do their research.

“If you are deciding to work with a different provider for a service, you need to complete due diligence,” she said.

This includes finding out who the company is, who owns it, where data is stored, and their IT security protocols, and partnering with their aggregators.

“You need to make sure that you’re getting into business or going to be serviced by a company that is going to protect you, your business and your clients as you would yourself,” Blethyn said.

NextGen is the leading technology partner for the mortgage and finance industry, partnering with over 50 lenders. It processes over seven in 10 mortgages in Australia and its key focus is to “make lending easy”.

The customer consent process around open banking is still evolving.  Currently there are a couple of solutions in the market, one of which NextGen is in the process of testing with certain broker groups.

Day one of the MFAA National Conference included two Women of Influence events: “Leading for impact and Women, broking, and the economy”.  Day two included sessions on a range of topics from the future of business, to winning the digital minds and analogue hearts of today’s customers.