Only 10% of banks have high-quality CDR mortgage data

A new white paper has been released by Perth-based fintech Regchain™ revealing the extent of data quality issues currently plaguing lenders, which is hindering the efficacy of open banking.

Last year, the Australian Competition and Consumer Commission (ACCC) and the Office of the Australian Information Commissioner (OAIC) revealed that data quality in the open banking ecosystem was “a priority area for compliance and enforcement activities”, after raising over 280 separate issues relating to open banking data quality.

Regchain™ leverages this open banking data for its Stryd Product Repository, a real-time product and pricing database used by mortgage brokers to find borrowers and their clients better interest rates. (The tool is also to be used by both banks and non-banks to see how their home loan products stack up against the bank market for pricing and other features.)

However, after identifying repeated issues with the quality of home loan Product Reference Data (PRD) being provided – including incorrect interest rates, fees and charges, and the eligibility criteria for banking products – the fintech undertook research into the extent of the issue.

The resulting report, Democratising Data for the Good of Consumers: Unlocking the potential of better quality Product Reference Data, has revealed that the majority of banks are still not providing data that is of high quality. This is despite open banking reporting having been a mandatory requirement since 2020.

48% of mortgage products have CDR data quality issues

After reviewing 1,600 individual home loan products offered by 86 bank brands, Regchain revealed that only 10 per cent of the lenders had very high data quality (i.e. where the data provided by the bank was usable for all products as disclosed, without requiring any workaround).

These were Australian Unity Bank, Bankwest, Commonwealth Bank of Australia, ING Bank, Macquarie Bank, ME Bank, Northern Inland Credit Union, St.George Bank, and ubank.

An additional 15 lenders (or 17 per cent) were found to have a ‘high’ rating (where their data was usable for all products as disclosed, with some remediation required by Regchain due to slight, non-prohibitive quality issues).

Eighteen banks (21 per cent) were rated as ‘good’ or ‘average and more than half of the lenders – 44 lenders – were in the substandard categories of ‘low,’ ‘poor’, and ‘very poor.’

Of the products reviewed, 768 had some kind of data quality issue (48 per cent of all products that are publicly available). As such, around 832 (52 per cent) of products were potentially usable.

Around half (52 per cent) of lenders were found to have one type of data quality issue, with 34 per cent having two data quality issues, and 11 per cent having three issues. Three per cent of lenders had four such issues in the data.

The most common issue was missing LVR or loan amount information (for 31 lenders). This was followed by missing or incorrect loan purpose, lending rate type or repayment type information (15 lenders), incorrect lending rates (14 lenders), and incorrect loan amount information (12 lenders).

A number of lenders also had problems with duplication, while others had a level of variation between different products.

Many of these issues related to how information was input or formatted into the product detail API for PRDs, according to the fintech.

As such, Regchain suggested a range of measures to improve the data quality issues hampering the system, including:

• Having a more defined and rigorous data standard for all lenders to implement.
• Ensuring that non-mandatory products have their own product detail API and a unique product ID.
• Accurately reflecting product names so there are no products with the same name.
• Bringing in an ongoing periodic review of lender product APIs.
• Establishing a way to report PRD data quality issues.

It noted that the appointment of Adatree as the ACCC’s CDR auditor could also improve oversight and compliance with open banking requirements, thus lifting quality.

Speaking of the findings, Ruth Hatherley, founder and chief executive of Regchain, said having reliable PRD data was a critical enabler of CDR’s goals of supporting consumer choice and promoting competition.

“Only nine brands – that’s about 10 per cent – are providing consistently ‘very high’ quality product reference data across all the residential mortgage products we reviewed from 86 bank brands,” she continued.

“To power our Stryd app and ensure the best data, we address data quality issues with business rules, cross-referencing to publicly available information on websites and manual reviews.

“The good news is that product reference data quality is getting better because it’s an enforcement priority for the ACCC.

“We are working closely with them to let them know on a weekly basis what we’re seeing at the coalface with respect to incorrect interest rates, missing data and the misuse of free text fields when there is a relevant structured field.”

Rehan D’Almeida, CEO of FinTech Australia, added: “One key step in realising CDR’s full potential is improving the quality of product reference data, and there are positive signs of progress on this from the banks. This ensures consumers can make clear comparisons and choose what is genuinely right for them.”

[Related: Incorrect interest rates in CDR data ‘key regulatory focus’: ACCC]