NextGen.Net – the company behind mortgage lodgement platform ApplyOnline – has acquired Australian fintech and open banking solutions provider Frollo.
The move, which will see the Frollo brand and business continue to operate independently and accelerate its own open banking projects, aims to marry the two companies’ propositions and improve the lending process.
As the only fintech to so far be an accredited data recipient under Consumer Data Right (CDR) rules (after it participated in the open banking trial and helped build and test the infrastructure alongside the big four banks), Frollo enables customers to access data from consumer accounts held with the big four banks and give them a real-time view of their money.
It is also working to streamline the lending process by using real-time data from the open banking regime (which officially went live on 1 July) for loan applications when customers request it.
Its artificial intelligence engine built for open banking data enhances the platform’s personal finance management (PFM) features and automatically categorises expenses.
It is hoped that the acquisition could enable NextGen.Net to directly pull open banking data (with the consumer’s permission under CDR), such as expenses, and embed them into ApplyOnline loan applications, reducing requests for more information and making the expenses piece of the mortgage process less cumbersome for borrowers, brokers and lenders alike.
Adrian Macleod, CEO and founder of NextGen.Net, commented: “Frollo recognised the potential of CDR early on, had a clear vision and demonstrated a singular purpose in building that vision. They are the Australian market leader in open banking, and the Frollo platform is by far the most advanced, particularly in its use of artificial intelligence.
“We are very excited by the possibilities ahead for the two organisations,” he said.
Gareth Gumbley, CEO and founder of Frollo, added that “open banking is the game changer, giving consumers control of their data and how it is used”.
“We are thrilled to now be part of the NextGen family; there is a huge potential for growth,” he said.
“We’re excited to explore the opportunities for our technology in lending services alongside NextGen.Net, and leverage learnings as we continue to support our fintech and banking partners to get ahead in open banking,” said Mr Gumbley.
NextGen.Net has not yet provided a time frame for when the open banking data information from Frollo will be available through ApplyOnline.
The acquisition comes amid an increasing scrutiny on how living expenses are treated and assessed in mortgages, following on from the “wagyu and shiraz” court case between Westpac and the Australian Securities and Investments Commission (ASIC).
Last month, the Full Federal Court dismissed ASIC’s appeal against Justice Nye Perram’s decision to overturn its responsible lending case against Westpac Group, which has since been dubbed the “wagyu and shiraz” case.
The case focused on Westpac’s reliance on expense benchmarks, such as the Household Expenditure Measure, in serviceability assessments used for home loan applications through an automated decision system.
ASIC had alleged that by failing to separately assess declared living expenses, Westpac fell short of obligations under the National Consumer Credit Protections Act.
However, two out of three judges in the Full Federal Court upheld the court’s initial decision that sided with the major bank.
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.