Industry leaders believe that regulation is preventing the Australian mortgage industry from harnessing the powers of digital and customer data to provide better consumer outcomes.
The Deloitte Australian Mortgage Report 2016, released last week, asked industry leaders where innovation and digital opportunities in mortgages will come from over the coming years.
ING Direct executive director of customer delivery Lisa Claes pointed to the bank’s work in Romania, where it has teamed up with other banks and, through lobbying with the Romanian ATO [tax authority], has gained access to a customer’s income details with their consent.
“This gives the bank the ability to accurately assess serviceability, which when coupled with positive credit reporting enables a borrower to obtain instant access to credit, secured and unsecured,” Ms Claes said.
“Customers love it,” she said. “Call it ‘big brother’ but it is becoming the way of the world: customers being willing to share intimate financial data where it helps them obtain something they value.”
Pepper CEO Patrick Tuttle said the group offers personal loans in Spain, where it has also been able to gain greater access to customer data.
“We get access to social security information from the government in a direct feed. So we have a lot of data that makes online personal loans much easier to process with automated decisioning,” he said.
However, AFG executive director Malcolm Watkins said that in Australia, regulation will be a major hurdle for banks looking to innovate.
“The current regulatory systems prohibit that kind of loan approval or access to customer data,” he said.
“Right now we would love to be able to tell a customer they are pre-approved to upgrade their motor vehicle based on their existing loan payment history, for example, assuming their employment and expense scenarios have not changed since last we spoke to them. The current regulatory systems environment slows that kind of innovation.”
Mr Watkins said that banks in the US can be far more direct when targeting customers from particular segments or demographics.
“If they want to send an offer only to doctors in a particular postcode, they can do so,” he said.
“Our privacy laws prevent such access to customer information and you cannot make a specific offer of finance to a customer without proving you know the customer in the first place.”