The Open Banking initiative, which will come into effect in January, will allow customers to securely share their data and transaction history with third parties instantly – making it easier for such parties to find the most suitable products for them.
It is being billed as the movement that will put the consumer in the position of power. Customers will take back control, they say.
Surprisingly however, a study by Which? has revealed 92% of consumers actually have no idea what Open Banking is and 52% claimed they would be unlikely to share their information even if they could. Not quite the power tool it was hoped to be, then.
Indeed, I believe Open Banking will actually be more of an adviser tool and should be viewed as such. Just like robo-advice – a word that strikes fear into the hearts of many brokers at present – these technical advancements will help brokers to deliver a better service to their clients.
The market is moving forward – technology is a key part of everyday life and our industry must embrace it or risk being left behind.
I believe robo-banking and automated advice will become more widespread and we may see some consolidation, which is only natural in any changing industry.
But it won’t be the end for the traditional mortgage brokers.
What we will see, I’m sure, is a two-tier system.
Lenders will offer a core range of products for the most straightforward of clients, clients who could be perfectly attended to via an automated advice process.
But we all know these clients are not in the majority and the concierge service offered by brokers will still be very much in demand from those with more complex borrowing needs.
Lenders will likely design a second tier of products for the more complex client and we may well see a dual pricing scenario.
Such a movement could see more opportunities for smaller lenders who are able to provide more bespoke products. Product design will come into its own.
These are exciting times, don’t fear them.