Open Banking and Application Programming Interface (API) technology are now bringing these changes to the mortgage industry.
So we asked this week’s Marketwatch panel whether the free flow of data in lending is a good thing and what it means for the future of mortgage advice.
You’d have to be on a different planet to have missed the Cambridge Analytica and Facebook story.
But if we’re honest, most of us couldn’t articulate exactly what they’ve done with the data, which laws they’ve broken or probably whether our own personal data is involved anyway.
However, we know it’s bad – they were underhand with us.
Before that, we were more than happy to share our likes, dislikes, passions, fears and game play data because what we got back from them felt like a fair exchange.
We knew we were getting targeted ads, we’re not daft, but that was ok.
It was when they used it for, frankly, dishonest ways that we got upset.
So – what about Open Banking?
It’s exactly the same. If our private banking data is used to help secure a sensible mortgage, inform our financial planning, or make decisions around pension investments then most people will be happy to share it.
But woe betide any organisation that abuses the access to that data and uses it to sell advertising for the retailers we shop with, draw psychometric profiling from our payday to payday behaviour, or target those less well off with too easy to access and too hard to exit loan deals.
We don’t mind sharing data if we get a service that’s useful to us.
So, will using technology, APIs and Open Banking help or hinder the customer experience?
Like so many things – it depends what you do with it.
It’s fair to say that mortgages require a fair bit of data. A bucket load in fact.
Over the years, regulation, technology restraints, broker and customer appetite have all contributed to the overly complex world of securing a mortgage.
As a result, the mortgage intermediary has done very well out of this mess, and it has never been more important to ensure a customer is receiving quality advice to navigate this minefield.
Unfortunately, all this complexity, re-keying of data and time spend preparing a client file, has got a little out of control, to put it politely.
This is where Open Banking and APIs come into their element, by joining the dots and filling the blanks.
API’s are one of the critical building blocks for the future of financial services.
Systems talking to one another, single sources of data that can be utilised by all parties involved in the mortgage journey.
Real-time updates that add efficiency like never before to the intermediary world. Everyone singing from the same hymn sheet.
Open Banking is here, it’s not going away, and if the trust and education barriers can be overcome, the value add to the customer and broker is immense.
Imagine an industry where a customer no longer needs to go through the bulk of their finances with a stranger – after all, it’s no secret the great British public would ideally prefer not to sit down and discuss their finances with someone, if they had the choice.
Lenders have overcome a lot of changes recently and we hope that API is now high on their agendas, so they can begin engaging with the broker community to ensure we are not keying data more than once.
Open Banking is a broader subject and more intriguing.
This should provide the biggest shake-up in the mortgage industry for many years and while some will see this as a threat to their business, others will recognise the opportunities that it will create.
I believe it is important to remember that technology is there to enhance a customer’s journey through the mortgage process, rather than replace the quality advice that it delivers.
We have all witnessed some of the mistakes the conveyancing industry has made with their reliance on technology over customer service.
Open Banking is likely to serve those well who have low loan to values, standard properties and straight forward applications, but it cannot replace the discussions with an underwriter or helping a client place a mortgage that is slightly out of criteria.
It will struggle to understand the deductions on payslips, the nature of variable pay, income from self-employment and those unusual properties.
Fintech is coming and brokers need to embrace the changes or risk being left behind.