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Open Banking Has Arrived!

Open Banking Has Arrived!
The brave new world of Open Banking started on 1 July 2019!

From this date, if requested by a customer, legislation requires the major Banks to share information about:

  • Debit cards
  • Credit cards
  • Deposit and transactional amounts data

Open Banking will be extended to mortgage and loan products by February 2020.

In practical terms, this means if you apply for a loan or other facility elsewhere, you can provide authorisation to an approved Credit Bureau to share your loan and transactional history to support the application.

Open banking promises to be a “game changer” for customers!

In time, it should allow those with a good credit history, to access improved pricing, terms and conditions.

Open Banking – The need for change!

Historically, financial institutions have tightly held their customer information.

They knew your track record, but this wasn’t shared with other financial institutions or businesses.

Therefore, the only information alternate Lenders could use to approve and price the loan was:

  • The information that you provided during and post the interview
  • Security on offer
  • A report from a Credit Agency (which focused on negative events and the number of credit enquiries)

The missing “piece of the puzzle” was your track record and how you had conducted your accounts.

This made it hard those with a good credit and transactional account history, to enjoy the full benefits of their positive behaviour.

You can see inside the “black box”

Another major positive Open Banking delivers is the ability for customers to see, review, (and if needed challenge), information held by the financial institution.

I gave details of how you can check what is being held by the Credit Agencies in my September post  – “Comprehensive Credit Reporting – How it affects you!”

Summary

Overseas experience suggests that once fully implemented, Open Banking will see Lenders price differently based on an applicant’s track record.

Customers with a good track record should be able to seek a better deal based on a differentiated risk profile.

Your track record will become a valuable asset. One that should deliver tangible benefits, as Lenders are better able to price for risk.

Chris Anesco

I am an experienced Mortgage Broker and love helping my clients access the finance they need to buy a home, upgrade or undertake renovations.

I enjoy building long-term relationships and undertaking research to find truly market competitive offers. Attention to detail is one of my major strengths.

Chris Anesco is a credit representative (399790) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237)

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