How can we achieve open banking Utopia?

After a white paper revealed that nearly half of mortgage product data in the open banking ecosystem has quality issues, industry participants have laid out what needs to be done to reach an open banking “Utopia”.

In a panel event hosted by fintech Moneycatcha for its Regchain Stryd platform on Tuesday (28 May), four senior leaders of the mortgage industry shared their insights into the issues holding back the Consumer Data Right (CDR) from its potential, and how Australia can unlock more choice for consumers through CDR.

The problem

Speaking during the panel discussion, Moneycatcha founder and CEO Ruth Hatherley noted that the company’s Stryd master product repository was pulling open banking data on a daily basis to provide customers with an accurate depiction of the best products in market, but only a limited handful of lender products were able to be used.

She said that the data standards needed to be expanded so that there are more “key mandatory fields” to ensure consistency in data outputs.

“We’ve got 86 lenders in our panel or in our panel, and there’s probably 75 different interpretations of the data standard. That’s what’s got to be fixed. And I think when that fixed, it’s a straight pass through…

“Our customers only get the products that are reliable and 100 per cent accurate … so at the moment, it’s very difficult to take the raw data and use it in a meaningful way for consumers,” she said.

“We have a situation where brokers are doing home loan product and pricing recommendations to their consumers but those products are not the ones the products that we can’t publish in our repository, because of quality issues.

“Without our customers – being product providers, and the banks and lenders who are the actual product publishers – the ecosystem cannot make use of this legislation. And so, for us, collaboration in this space is critical in order to provide the capability of choice, control and convenience for consumers.”

What would Utopia look like?

According to Hatherley, an open banking Utopia would be for consumers to make product choices by any origination channel they like.

“We – lenders, technology providers and the actual originating channels for consumers – have to stop being ‘frenemies’ in this space,” she said, outlining that all lenders need to ensure they are complying with the CDR data standards and inputting the correct information in a consistent manner.

Mike Page, the CEO APAC for MogoPlus – a platform that provides insights to support lending solutions – said he believed that CDR Utopia would be for consumers to give consent for companies to access their open banking data and then receive “nudges” based on what their data is doing.

He explained: “If an enterprise I trust has my data and can give me nudges, give me help and advice once they’ve seen something in my data – whether it be my superannuation or wealth provider noting I’ve changed job, or bought a home and the reach out to ask if that has changed my insurance or investment strategy – I think that would be a real game changer for me.”

Sam McCready, chief customer experience and digital transformation officer at aggregation group AFG, suggested fixing the data quality issues in CDR data – particularly when it comes to the classification of expenses – was a priority for both consumers and brokers.

He added there also needs to be a centralised location where a consumer could grant consent for their relevant providers to utilise their open banking data (whether a broker, lender, financial management app etc), rather than multiple access points.

Page agreed, suggesting there could be an issue of consumer “consent fatigue”. He explained: “Let’s fast forward another 12–18 months, we’re going to have banks, utilities, service providers (and soon, non-bank lenders) with all these different consents for consumers… it will be lost in a sea of consent.”

Meanwhile, Lance Goodman, the CEO of comparison and advice platform Compare Club, outlined that Utopia would be for open banking “to help people manage their bills” and enable trusted advisers to help consumers save money on multiple products – such as insurance or home loans – on an ongoing basis.

“If we can help people across multiple products – not only in one point in time but over a period of time – and we can see if their situation changes, that’s a key thing.

“Purely from a lending perspective, having data categorised correctly could get a much quicker turnaround and potentially moving to a bidding system where each lender can assess the data individually and provide an offer almost in real time.”

How do we get there?

Page said he believes there needs to be much greater consumer awareness of the value of open banking to ensure that open banking is adopted in the way in which it was envisioned.

“People don’t wake up in the morning and say ‘I must use my Consumer Data Right this morning. But they do wake up and say: ‘I want a new car, or a house or I need to get out of the hardship situation I’m in’. So there’s got to be an end result, there’s got to be value and there’s got to be a use case at the end of it,” he said.

Goodman agreed, suggesting that the government should pay for a consumer awareness campaign to educate consumers on the benefits of open banking/using their Consumer Data Right, with Page adding that businesses also had a responsibility to “facilitate and fuel the open banking ecosystem to actually showcase value and use cases for consumers”.

In her closing remarks, Hatherley concluded: “I think everyone’s got a responsibility – everyone who holds the products – to improve the consumer education piece … but I think the government does have a responsibility to increase exposure.”

[Related: Only 10% of banks have high-quality CDR mortgage data]