Brokers discuss its expansion and where it could be improved
Open Banking allows the user to share certain financial information, such as their balance and transaction history, with other financial providers or services. But what do brokers think of its potential?
While many believe the plethora of solutions Open Banking offers are clear to see, in order for it to become more intertwined with the mortgage market, many who spoke to Mortgage Introducer outlined the need for financial institutions to collaborate more widely.
Financial institutions collaboration
Justin Moy (pictured), managing director at EHF Mortgages, said the more financial institutions talk together, the faster and more accurate lending decisions will be.
“We have seen more mortgage lenders adopt and use Open Banking to approve mortgages with little or no supporting documentation, issuing offers within minutes, rather than weeks,” he said.
Moy added that this is not about the days of no financial checks, but the ability to check bank accounts for affordability, and other agencies to evidence declared income, in a few seconds, eliminating fraudulent documentation too.
Russell Maggs, mortgage and protection adviser at Maggs Financial Services, said it is a positive that mortgage lenders can use open banking to quickly and efficiently approve applications. However, he believes there needs to be more joined up thinking between the regulator and networks or directly authorised firms to advance this technology.
“Allowing Open Banking throughout the industry will improve consumer outcomes, reduce errors and improve the quality of mortgage business written,” he said. However, he added that mortgage advisers need to have the same information as mortgage lenders for it to work properly.
Open Banking solutions
Chris Barry, director at Thomas Legal, said Open Banking is providing a plethora of solutions for clients and those in professional services.
“Clients are able to view savings and borrowing from different providers all in one place; this allows consumers to shop around for the best rates with the convenience of having them linked as if it was all in the same place,” he said.
From a professional services perspective, Barry said Open Banking allows a quick, easy and automated way to qualify source of funds. AML checks are becoming increasingly important at all stages of a property purchase, and Barry said technology providers are using Open Banking to sweep all accounts held by a client and confirm where a client’s funds have come from.
“This saves a tremendous amount of time for all involved as clients will no longer need to provide bank statements from different accounts,” he added.
Jonathan Burridge, founding adviser at We Are Money, said there are sectors of the finance market such as vehicle finance and unsecured loans, where Open Banking is being embraced very successfully, providing fast decisions and no-fuss applications.
“There are a few mortgage lenders that embrace the technology, but, it could simplify and improve the efficiency of the advice process if more in the mortgage industry used it,” he said.
Document gathering and also document due diligence, Burridge said, could also be enhanced by the use of Open Banking. He believes lenders could start to accept Open Banking as an alternative to ‘old fashioned’ PDF statements, and he believes the same is true for networks.
Do you believe it is in the industry’s best interests to adopt Open Banking? Let us know in the comment section below.
