BROKERS are split on the potential of Open Banking for the specialist lending market, a new survey has found.
Research conducted by residential lender Bluestone Mortgages found that 50 per cent of brokers were optimistic about the effects of the data-sharing initiative on the industry, meaning that half of the respondents were less convinced.
Open Banking launched to great fanfare in January 2018, mandating high street banks to share anonymized customer data with approved third parties. This is meant to improve competition in financial services, with lenders able to utilise banks’ data to provide better services for their clients.
This can be particularly beneficial when assessing potential borrowers with more complex income or expenditure patterns, Bluestone Mortgages said.
“The fact that Open Banking can make accessing customer data much easier, radically reduce decision times and vastly improve customer outcomes will be invaluable to a sector that caters for complex borrowers,” said Steve Seal, managing director at Bluestone Mortgages, which uses Open Banking technology in its underwriting processes. “We hope to see the solution gain more traction in the specialist market going forwards.”
Looking more broadly at the impact of technology on the specialist lending market, the survey found that 65 per cent of brokers believe that technology driving efficiency across the application process will have a positive impact.
Looking ahead to the next 12 months, 17 per cent of brokers thought that a rise in technology driving efficiency across the application process will be the biggest driver of growth in the market.
This came second to the growing number of adverse credit customers looking to purchase a home, with 20 per cent of brokers considering this to be the biggest driver of growth over the next year.
“As more brokers embrace technology, the specialist lending market will continue to grow,” said Seal. “Technology has quite clearly demonstrated its ability to improve the application process over recent years and will continue to contribute to the positive customer outcomes that specialist lenders and brokers deliver. It will be vital that all brokers are equipped with the digital tools that they need in order to feed technology into the application process effectively and maximise the potential that it holds both for themselves and their clients.”