Further developments on the open data front have come to light since my last editorial, which considered the disruptive potential of Macquarie Bank’s new open banking platform.
On 22 September, three days after my Macquarie op-ed, the Australian Bankers’ Association (ABA) lodged its submission to the Farrell inquiry calling for an industry-wide model to implement open banking.
This will include a phased approach by banks to sharing data over the next two years, subject to the development of enabling legislation. The ABA has also proposed an industry working group as a vehicle to get the new regime moving.
Things are travelling in the right direction for an innovation boom in Australian finance. It will be interesting to see who comes to the table first — the new tech-driven entrants or the credit-savvy incumbents.
I know one mortgage business that's already making a play. The major mortgage broking franchise is currently working on a budgeting tool that will scrape information from a customer’s transaction account and effectively allow brokers and planners to help the client manage their finances.
Giving customers the option to share their own data will change the banking industry radically, provided that the appropriate security measures are in place and those receiving the data actually know what to do with it.
Personally, I believe mortgage brokers are in the perfect position to capitalise on these developments. Other than accountants, mortgage brokers are often the first financial services professional someone will visit. Technology has smoothed out some of the pain points of a broker’s data collection duties, but an open banking regime could really turbocharge the efficiency of broker businesses.
There will no doubt be an onslaught of new and exciting apps in the pipeline, most likely being developed by start-ups with little knowledge of the finance market.
The mortgage industry, including brokers and aggregators, should be seizing the opportunity and building its own platforms to harness customer data and delivering products and services tailored to each client’s specific needs with speed and accuracy.
Complacency, lack of knowledge and fear will be the most obvious barriers. It’s very easy to fumble this opportunity and give the tech players a nice little interception.
But fear can be met with courage, a lack of knowledge with learning and complacency with an attitude shift.
If you want to ride the wave of the next innovation boom, it might be worth finding out what’s happening in Silicon Valley, California — the epicentre of progression and home to Google, Apple, Facebook and just about every other tech giant that has transformed our lives in recent years.
Delegates will learn from and network with the founders and CEOs of the leading mortgage innovators in the US, such as StreamLoan, Roostify and Yodlee.
The Adviser’s US Study Tour kicks off in San Francisco on Tuesday, 31 October.