Open banking is set to reshape mortgage processes, but what does it mean for advisers, their clients, and compliance obligations?
Open banking is now moving from concept to reality. With the regulated framework beginning to take shape, advisers are starting to see what open banking could actually mean for their day-to-day workflow – and more importantly, what it could mean for their clients.
At its core, open banking should remove many of the friction points in mortgage applications, from slow document collection to manual expense analysis, and uncertainty around the accuracy of information supplied. But for advisers, the bigger question is not whether open banking will change the process (it most certainly will) but whether it will prove it.
A meaningful evolution
For Dylan Ferreira, a partner and mortgage adviser at Vega, open banking represents an evolution rather than a disruption.
“Open banking has been discussed in New Zealand for some time, and while we are still in the early stages of seeing how it will practically operate across the mortgage sector, it has the potential to become one of the more meaningful changes to the way advisers, lenders and clients work together,” he says.
Ferreira believes its biggest value lies in reducing manual administration and improving the quality of the information advisers work with. And while it may not remove the need for all documentation, it could reduce the back-and-forth that often slows applications down.
“It should allow more time to be spent on what clients actually value – advice, strategy, structure and guidance," said Ferreira.
It’s a view echoed by Yuan Gao (pictured), Director at AffordX, who says open banking could fundamentally transform how advisers build an accurate picture of a client’s financial position.
“Right now, the typical home loan application involves chasing PDFs, bank statements, payslips and screenshots, often across multiple banks and accounts. It is time consuming for the adviser and frankly a painful experience for the client,” Gao said.
“With open banking, advisers can access categorised, real-time transaction data directly from a client's bank with their consent. That means income verification, expense categorisation and liability mapping can happen in minutes rather than days.”
More than a speed solution
Open banking is often positioned as a speed solution, and in many ways it is, with the potential to reduce bottlenecks and shorten turnaround times. But Ferreira also notes that the initial rollout may bring a mix of benefits and challenges.
“Particularly in the early stages there will still be obligations around consent, privacy, and how data is handled, so it will not remove all complexity," said Ferreira.
Gao agrees that compliance requirements will increase in some areas, but believes open banking will ultimately strengthen advisers’ position. “Consent is explicit, auditable, and managed through the regulated framework,” he said.
That is a notable shift from the current environment, where some clients still use insecure methods to share information, from screenshots to screen scraping tools.
“The data comes directly from the bank via regulated APIs, so its provenance is clear,” Gao said. “That is not just faster, it is better compliance because the data trail is clean from the start.”
One of the most useful changes open banking may bring is earlier transparency. Ferreira reckons advisers often lose time due to incomplete or misunderstood information at the beginning of the process, which can lead to rework later.
And Gao sees this as one of the most significant advantages.
“Advisers can identify issues earlier, such as undisclosed debts or spending patterns that might affect serviceability, and have honest conversations before an application is submitted rather than after a lender flags something.”
Client trust in focus
While open banking is designed around security and consent, it seems that client trust will determine whether it succeeds.
“Ttrust will be critical - financial data is deeply personal,” Ferreira said. And he believes advisers will play a key role in helping clients feel comfortable with what is being shared and why, and that they can withdraw that consent at any time.
Gao pressed that privacy and trust are "make or break factors" for adoption, and warned against treating consent as a tick-box process. He also raised the fact that while open banking may make it easier to access data, advisers still need to ensure they only access what is required for the purpose.
“The biggest risk is complacency. Just because the data is easier to access does not mean advisers should access more than they need," said Gao.
This is where adviser professionalism will matter. Open banking may be supported by regulation, but advisers will still need strong internal systems around file handling, privacy, and retention. There will be a learning curve for advisers, particularly around understanding how consent works and how to explain it clearly to clients.
But both Ferreira and Gao see this as manageable if advisers and support teams are properly prepared.
When it comes to whether open banking could support a more competitive lending market, there is certainly agreement that it could, especially by reducing friction for refinancing and comparisons.
And Ferreira believes better data should lead to better advice and more accurate option analysis. “If we are the trusted party helping a client make one of the biggest financial decisions of their life, it makes sense that we should be working from clean, reliable data that comes as close to the source of truth as possible," he said.
Ferreira believes it may also make annual reviews easier and help advisers hold lenders accountable. “If advisers can more easily review a client’s position and compare options, it helps keep banks honest.”
Gao agreed, noting that when borrowers can share financial data quickly, the effort required to shop around drops significantly. “Right now, switching lenders or even getting a comparison is a hassle that puts many people off. Open banking removes that barrier.”
Gao added that lenders who embrace open banking in their credit decisioning may eventually be able to price risk more accurately and potentially offer sharper outcomes.
Get prepared now
So where to from here? The consensus is that advisers should start preparing early. And Ferreira believes this preparation needs to happen at business level, not just adviser level. “Advice businesses, aggregators, compliance teams, technology providers and support staff will all need to understand how open banking may impact the advice process," he said.
Ferreira recommended reviewing internal processes and asking a key question - if administration reduces, how will advisers use that time to improve client experience?
However Gao’s advice is even more direct – to start using it. “Advisers do not need to wait for the industry to fully mature before they start integrating open banking into their workflows.”
Gao recommends choosing technology partners that support regulated open banking, updating client onboarding processes, and ensuring compliance teams are aligned on retention and privacy obligations.
While open banking will undoubtedly change the mechanics of how advisers gather information, neither Gao or Ferreira think it will reduce the need for mortgage advice. If anything, it could increase its value by guiding clients through complex decisions, protecting their interests, and delivering outcomes that are based on trust.
