"Not only does it cut down on the resource required but it can also speed up the whole process, not forgetting the ability to get quicker results for the client."
For a start, let’s look at Open Banking take-up recently. Figures from the Open Banking Implementation Entity show that four million Open Banking payments took place in 2020, that’s up from just 320,000 in 2018; and six billion Application Programme Interface (APIs) were made to servers in the UK, up from only 66.8 million in 2018.
So, what does that actually mean? Well, it shows a growing level of use but also consumers are clearly getting much more comfortable in using Open Banking to provide details of their transactions to those that need them, namely the likes of advisers in the mortgage sector, but also in a much bigger way to the rising number of financial fintech operators that have understood the power of Open Banking and the products/services they can generate through it.
That being said, I think it’s safe to say that the mortgage market is not exactly leading the way in terms of using the data and providing a much more seamless route to mortgage offer. Indeed, over the last year, some lenders for example, have retreated further back to a manual approach, seemingly worried by the greater risk they appear to perceive in greater automation.
However, this really feels like a false economy. As we’ve found since launching Click2Check, and having been able to provide advisers with a product which can deliver both a credit report and up-to-date banking data for a client, there is a real appetite to use this type of technology because not only does it cut down on the resource required but it can also speed up the whole process, not forgetting the ability to get quicker results for the client.
There is however undoubtedly an obstacle to be removed in terms of moving the data on from adviser/client to a larger number of lenders, and those organisations being able to work it seamlessly into their systems.
I read an article recently that suggested it was up to the bigger mortgage intermediary firms to highlight how important the use of Open Banking data could be, and how it should be utilised much more effectively by the lending community.
And, of course, that is correct, but as I think we’re all acutely aware the mortgage advice sector is predominantly made up of small to medium-sized enterprises, and this is a sector which can be fundamentally shifted and moved forward by the activities of those SME firms.
Plus, when you have networks and clubs harnessing the power of large numbers of smaller/medium firms, there is also an opportunity for those distribution behemoths to add their collective weight to ensure that the benefits of utilising Open Banking filter right through the system from client up to lender.
Advisers are clearly seeing the benefit of full banking data transparency from their clients, having spent years attempting to tip-toe their way to the financial truth, with clients who sometimes feel that it would be beneficial for them to hide some of the financial facts from their adviser. Of course, nothing could be further from the truth, and now with Open Banking, advisers have no need to suggest that what the client has told them was nothing less than 100% accurate.
That cuts out a lot of the time spent dissecting client-provided data or asking why they might have left out regular payments which appear every single month. And, for lenders, being able to accept that level of data straight into the systems would be transformational for many, especially those still relying on a paper bank statement.
In a world which has been so reliant on technology over the past year, it surely makes sense for those major players within the lending community, to begin moving far quicker in an Open Banking direction. What will certainly help this, is more and more advisory firms utilising this data and showing the benefits it can bring to the client relationship, and to securing finance for their clients in a much quicker timeframe.
That ‘proof of concept’ cannot be ignored for too long; indeed, there are new lenders who have come to market recently, and those that are not too far away, that are going to benefit greatly from their openness to Open Banking. It’s already a case of catch-up for the others, and the longer they leave it, the further they’ll be left behind.
