The Competition and Markets Authority (CMA) published a range of measures it wanted to see banks implement by early 2018, focussed on banking products, but the possibilities offered by the proposed technology could offer huge benefits for the mortgage industry and its advisers.
The technology, known as Open Banking, will allow personal customers and small businesses to share their data securely with other banks and third parties, enabling them to manage their accounts with multiple providers through a single digital app. It will allow them to take more control of their funds and to compare products on the basis of their own requirements.
This week we’ve asked our panel of experts what this innovation means for the mortgage market.
Matt Lowndes, managing director, Coreco Group, sees the launch of single digital app in banking as major leap forward for the mortgage sector.
Ishaan Malhi, chief executive and founder, Trussle.com, says Open Banking technology will improve the quality and reliability of the service brokers can provide.
Peter Brodnicki, CEO, Mortgage Advice Bureau, welcomes the support from the CMA to push forward technology in retail banking but points out the mortgage market is a different animal.
My first reaction to the announcement by the Competition and Markets Authority on Open Banking was ‘halle-bloody-lujah’ – Welcome to the 21st century.
You only have to walk through the City of London in the rush-hour to know how important mobile devices have become. We have become obsessed with data, without realising it. We can track our online shopping; we can tell what pub our mates are drinking in and more importantly how I got home the night before.
The CMA wants “customers to be able to access new and innovative apps which will tailor services, information and advice to their individual needs”. Is this a threat or opportunity to the broker community? My view is that any technological advancement has to be seen as a fantastic opportunity to service our clients like never before.
I welcome this kind of innovation and the introduction of a single digital app could be used to finally unlock the data exchange between client, broker and lender. Why do we all collect the same data and rekey it over and over?
On a more practical basis if a client can provide an electronic amalgamation of a bank statement that works as a budget planner and automatically populates affordability calculators, haven’t we just made the customer experience infinitely better?
Brokers and lenders need to work together on how best to use this technology, always with the client’s best interest at heart, as they will dictate how best to use this technology. We need to also ensure that this is not used as an excuse not to offer advice, but rather how it can be used to complement and ultimately speed up the advice process.
Ishaan Malhi, chief executive and founder, Trussle.com
Technology platforms have enabled today’s consumers to get what they want, when they want it. We’ve already seen this happen across the transport, accommodation and media industries. The CMA’s report is the first real signal that this could be achieved on a wide scale within the financial services sector.
At Trussle we’ve developed our own technology to make sure that people are always on the most competitive mortgage and aren’t spending over the odds through failure to remortgage; a £29bn problem across the UK.
Through the CMA’s initiative, consumers across the board will be empowered with more accessible, immediate and transparent information to make smarter decisions with their money and avoid situations like these.
It’ll also open a world of new opportunities for the likes of us and other advisers to further improve the quality and reliability of our service by having greater access to 100% accurate information, for example, when conducting affordability checks.
Challenges remain, and the timing is ambitious but having the support of a progressive regulator is positive and demonstrates why London and the UK are so often celebrated as the FinTech capital of the world.
It’s very encouraging that the industry is supporting the use of technology in order to improve the customer experience. Certainly it’s something that MAB are championing. However, let’s remember that when we’re considering the CMA statement around the requirement to implement Open Banking by 2018 we’re talking about quite a different set of products, as the focus of the directive is around personal accounts, for example increasing transparency around fees, charges and penalties that banks charge in a ‘self-serve’ environment.
The mortgage market is different, as these days it’s nearly an entirely advised process. Given that context, whilst there are products out there to help customers send information to advisers securely, banks, lenders and the regulator need to accept this type of innovation to move the mortgage market forward.
Of course, we are starting to witness a ‘sea change’ in the mortgage industry with more and more lenders recognising the ‘win-win’ of an increasingly automated process, both in terms of improved cost efficiency and thereby increased profitability, together with an improved customer experience.
But let’s be realistic about it, technology as an enabler will only help to enhance the customer experience if it makes everything easier to access and reduce the amount of documents that need to be gathered, as well as being proven to be secure. However, any moves towards this are surely a step in the right direction.