New Zealand’s regulated open banking system became operational on December 1 and the first group of organisations were accredited to use the system 18 days later.
One of the first to be accredited was Akahu New Zealand's leading open banking intermediary, providing data connectivity to a broad range of government, corporate, and fintech organisations.
It uses the regulated open banking system to generate "open banking statements" for loan applications and has early adopter customers including, Simplicity, Indi and Squirrel.
Akahu’s system enables the borrower to link their bank accounts so that the lender can fetch relevant data and automatically process that data, making the application process faster and easier.
Simplicity is one of the home loan providers that is making use of the new open banking system.
Chief executive Sam Stubbs says when a member applies for a home loan they can now share their financial information with Simplicity quickly and simply without sharing their bank login details.
“This means we can assess their application and give a decision promptly.”
Indi another new home online loan provider set up last year, has built a system for giving decisions on home loan applications within 15 minutes and covers the legal and valuation costs of refinancing,
High quality application data is essential this type of straight-through processing, Dave Woods, Indi chief executive says.
“Indi wants to ensure that the application data has been retrieved directly from the consumer’s bank accounts, rather than ingesting uploaded files that may have been tampered with.”
He says open banking gives Indi the confidence to make fast and accurate decisions. “Our customers want a quick answer and a great rate. We can give them both,” Woods says.
Advisers getting in on the action
About 60% of new home loans are originated through advisers in New Zealand.
For borrowers, the benefits are human advice, a simplified application process when applying to multiple lenders, and an expectation that the adviser will be able to shop around for the sharpest price.
Advisers help borrowers to prepare their loan application, including collecting the relevant financial information.
Squirrel has started using the regulated open banking system as a method of collating financial information from clients.
Founder John Bolton says some of Squirrel’s clients were wary of the old screen scraping methods to share their financial information.
“This new regulated open banking system is more secure, and there is a consistent set of rules for how it works across all of the major banks.”
Lenders and advisers say working with Akahu made it seamless to adopt the new open banking system.
It not only simplifies how clients share their financial information, reducing back-and-forth, but also ensures that data is secure.
Akahu expects the processes to become mainstream during this year and says ultimately the regulated open banking system makes it easier for New Zealanders to safely use their own data to shop around for better mortgage interest rates.
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