Open banking is here and it's charging full steam ahead. So just how are lenders and fintechs using your shared data in this brave, new, data-fuelled world? A new report has shed some interesting insights.
With all that's gone on over the past two years, one of the nation's biggest banking overhauls in recent memory has slipped under the radar.
It's called 'open banking', and it aims to allow you to easily and securely share your banking data with your bank's competitors to make it more convenient for you to switch banks when you think you've found a better deal on a financial product.
For example, instead of spending hours and hours gathering documentation (such as bank statements, expenses, earnings and identification documents) to refinance your home loan, you could simply request that your current bank sends the info across for you.
But, like most things, it comes with a trade-off: you've got to share your banking data with the prospective lender, fintech or allied professional to make it happen.
So just how do they use your data?
Australian open banking provider Frollo has just published the second edition of its yearly industry report, The State of Open Banking 2021, which surveyed 131 professionals representing banks and lenders, fintechs, technology providers, and brokers across the country.
The report shows open banking data availability has accelerated dramatically.
In the first 10 months of 2021, 70 banks started sharing consumer data and 14 businesses became accredited data recipients - including three of the four big banks.
This is an increase from just five data holders and five data recipients in 2020.
And more financial institutions are getting ready to jump on board.
The industry survey shows 62% of respondents plan to use open banking data within the next 12 months, and 38% within the next 6 months.
So what are they using the open banking data for?
Well, the most popular uses can be grouped into three categories:
- Lending: income and expense verification is highly valued by 59% of survey respondents.
- Money management: multi-bank aggregation and personal finance management were highly valued by 50% of respondents.
- Verification: customer onboarding (49%), identity verification (38%), account verification (34%) and balance checks (30%) were all highly valued.
For open broking, get in touch
Now, it's important to note that open banking isn't the only way you can make life easier on yourself when it comes to switching up financial products.
That's what we're here for!
We're an open book - always happy to check whether you can apply for a better deal on your home loan somewhere else.
And as you know, we pride ourselves on taking on the vast majority of the legwork, whether we're harnessing the power of open banking or not.
So if you'd like to explore your options, get in touch today - we'd love to help you out!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.