How to utilise Open Banking in the mortgage sector
Open Banking is growing rapidly in the UK’s current ecosystem.
The UK government recently reported that there are currently over six million active Open Banking users in the UK and this number is only increasing. According to the Open Banking Implementation Entity (OBIE), there are roughly one million new Open Banking users every six months.
This can only be a positive for all stakeholders. With the mortgage industry feeling the impact of ongoing Bank of England rate rises and lenders and brokers alike needing to deliver the best possible consumer outcome in line with Consumer Duty, Open Banking technology could provide part of the solution. How can professionals look to maximise it?
The key to a smoother process
At its heart, Open Banking is a secure and simple way for lenders and brokers to get a clear view and understanding of a potential borrower’s financial life. Customers can grant permission to their potential lender, allowing them to access certain financial documents such as bank statements and utility bills across all their products, regardless of the company. By doing this, the lender can make more accurate predictions of affordability and repayment capacity.
It also takes away the need for time-consuming, manual data gathering that delays the whole process, without compromising on the wealth of data and information provided to lenders and brokers. Avoiding such delays is crucial in today’s world, in which consumers are obsessed with instant gratification. Every walk of life has been digitised to offer this level of service, and mortgages should be no different in the borrower’s eyes.
But the current state of play in the market makes this somewhat trickier – high demand for lower rates causes considerable stress on brokers to secure these products before they change and, with H2 2023 set to be the biggest six months for maturities since 2008, this demand isn’t going anywhere. Open Banking streamlines the mortgage application process and reduces the risk of human error – a win for all.
Lenders who fully embrace the advantages of Open Banking will distinguish themselves by being able to offer personalised solutions and the best possible rates to the right people quickly and easily. The rise of its popularity, as long as consumers remain confident in their ability to control the data they share, has come at a pivotal time. Consumers prove they are not a risk, and lenders and brokers alike can process cases with ease without compromising on Consumer Duty compliance. Embracing the change has never been more important.