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Open banking is here and it’s charging full steam ahead. How are lenders and fintech’s using your shared data in this brave, new, data-fueled world?  

With everything that has gone on over the past two years, one of the nation’s biggest banking overhauls in recent memory has slipped under the radar. It is called ‘open banking’ and it aims to allow you to share your banking data easily and securely with your bank’s competitors to make it more convenient for you to switch banks when you think you have 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 information across for you. But, like most things, it comes with a trade-off – you have got to share your banking data with the prospective lender, fintech or allied professional to make it happen. 

How Do They Use Your Data? 

Australian open banking provider Frollo has published the second edition of The State of Open Banking 2021, which surveyed 131 professionals representing banks and lenders, fintech’s, 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.  

What Are They Using the Open Banking Data For? 

Well, the most popular uses can be grouped into three categories: 

1. Lending: income and expense verification is highly valued by 59% of survey respondents. 

2. Money management: multi-bank aggregation and personal finance management were highly valued by 50% of respondents. 

3. Verification: customer onboard (49%), identity verification (38%), account verification (34%) and balance checks (30%) were all highly valued. 

For Open Broking, Get in Touch 

It is important to note that open banking is not the only way you can make life easier on yourself when it comes to switching up financial products. That’s what we are here for! 

We are an open book and 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 most of the legwork, whether we are harnessing the power of open banking or not. So, if you would like to explore your options, get in touch with us today and we would love to help you out! 

Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au     


Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.      

About the author:       

Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.       

Connect with Louisa on Linkedin.      

Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).    

Disclaimer:This article contains information that is general in nature. It does not consider the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.      

I want to share a recent scenario with you. This home loan deal should have been a shoe-in.

The clients, a professional couple, earned really good money – between them, they cleared a healthy six-figure sum each year – so they could more than afford the home loan repayments on the loan we were applying for.

So we ran the numbers, collected all of their paperwork, checked their payslips and did all the groundwork to submit their loan to a suitable lender.

Everything looked good from our end, so our team was shocked when the note came back from the bank: “declined” due to missed/late payments on an old credit card.

The following week, it happened again. The borrowers’ record looked squeaky clean to us, and when we asked if they had any repayment issues or red flags, they said no.

Turns out they’d had a credit card two years ago, which had been closed for well over a year, and they’d fallen behind on their repayments. Again, we were told the loan was declined due to missed/late repayments.

Here’s the thing about applying for a home loan: there can be no secrets any more. Not since Open Banking was introduced.

What is Open Banking and How does it Impact You?

I think there’s still a lot of confusion around Open Banking, which came into effect around the start of this financial year (July 2020).

In a nutshell, Open Banking gives you the ability to share your banking data (like your transaction history and account balances) with third parties that have been accredited by the Australian Competition and Consumer Commission (ACCC). These third parties may be other banks, financial institutions or fintech businesses.

It was introduced to give you, the consumer, better and clearer access to your data. You control which third party can access your data, and how they can use that data under the open banking framework.

But here’s the thing: when you apply for a home loan, under Open Banking, lenders are sharing more information about you and your credit history than they ever have before.

This means that if you apply for any sort of credit, you need to be upfront and honest about any potential blemishes in your past.

Should You Tell Your Broker or Bank about previous Defaults or Missed Payments?

Absolutely! There is nothing to gain by hiding any information, no matter how big or small it seems to you.

As your broker, we operate under something known as Best Interest Duty (BID), which means we have a legal obligation to place the client with the right bank for you. If you tell us about a previous default, it might be the case that Bank A is likely to decline your loan – so we’ll place your application with Bank B instead, because their policy is a little more forgiving.

We always ask the question: have you had any issues in the last two years when paying any of your bills or debts?

Your answer to this is crucial. You have to be as honest as possible, otherwise we risk applying for a home loan with a bank or lender who, if we’d known the whole story upfront, we never would have applied with.

Moral of the Story?

Don’t cover it up – it most cases we can work around the problem and find a finance solution for you. If you’re not sure where your credit rating stands, you can always request a free copy of your credit profile. And if you have any questions about how you can get into a home loan that suits you, contact us today.

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