Lending and broking top open banking use cases

FinTech Australia has released its fourth edition of the Australian Open Banking Ecosystem Map and Report, which reveals that 20 per cent of use case channels for banks operating under the Consumer Data Right (CDR) are for lending, credit, and broking purposes.

According to the report, Australia’s open banking ecosystem has continued to mature in the past year, with 99.74 per cent of consumer bank accounts now connected and 98 per cent of data holders now active (80 banks and 114 data holder brands).

The data, sourced from the Australian Competition and Consumer Commission’s (ACCC) Provider Register, shows there are 158 use cases registered under the open banking ecosystem, with 32 of them being for lending, credit, and broking. This is the predominant reason why companies are using CDR data.

Players using open banking data for lending, credit, and broking include banks, non-bank lenders, and broker platforms such as Effi and Sherlok.

Outside of credit, lending, and broking, use cases include CDR data testing; data analytics and insights; personal finance; and payments (such as Afterpay and Beforepay). Other use cases include wealth and investing, business services, accounting and bookkeeping, and climate change.

However, the majority of recipient channels are in financial services (68 per cent), with the remainder being technology services, energy, professional services, cleantech, and property.

The report noted that the open banking ecosystem has continued to mature, with 135 CDR representatives now part of the system. This is an increase of 165 per cent (or 81 representatives) from December 2022. There are also now 96 data holders actively participating, of which 40 per cent are focused on lending, credit, and broking.

However, the Australian Open Banking Ecosystem Map and Report did note there was room for improvement in open banking compliance.

According to the report, while it is now taking less time for data holders to fix any implementation gaps, it is still taking an average of 59 days for data holders to rectify them (down from 119 days in December 2022).

Indeed, a recent white paper from Moneycatcha revealed that nearly half of mortgage product data in the open banking ecosystem has quality issues.

Commenting following the release of the report, Rehan D’Almeida, CEO of FinTech Australia, said: “With use cases starting to emerge, the challenge now is to encourage the capture and sharing of data on uptake and usage in order to quantify the impact of the CDR.

“Current cost-of-living challenges and higher interest rates make it more important than ever for us to see CDR-enabled products in the hands of consumers at scale; helping them manage their finances, getting a better deal and saving them money.

“We expect the next 12 months will be a period of innovation and uptake as the ecosystem matures, with fintechs continuing to lead the way.”

FinTech Australia added that it was “critically important” to continue to build confidence in the CDR and ensure ongoing investment from both data holders and data recipients.

The report reads: “As we enter the fifth year of the CDR, we see the following actions as critical to ensuring the continued delivery of value for consumers and businesses:

1. A three-year strategic plan for the CDR.
2. Publication of consumer usage and consent metrics.
3. Clarity on the government’s CDR reform agenda.
4. Clear direction and timing on screen scraping regulation.

“The year ahead will continue to demonstrate how the CDR has grown and matured, as well as highlighting the opportunities it presents for Australian consumers and the economy in driving competition and choice.”

Brenton Charnley, vice-president and head of open banking, Australasia at Mastercard added: “Mastercard recognises the potential of the Consumer Data Right (CDR) in Australia to significantly empower consumers with more choice and control over their financial data.

“Mastercard looks forward to the government’s response to the current consultations that focus on screen scraping and improvements to consent and data quality. These reforms will support both consumer and business adoption.”

FinTech Australia said it would partner with FinTechNZ and Payments NZ to expand the report to the Aotearoa New Zealand market.

[Related: How can we achieve open banking Utopia?]