Jeff Knight, director of marketing, Foundation Home Loans
Open banking is just one of many developments offering larger lenders the chance to outbid intermediaries. With access to customer data now readily available, we can expect technology to be used increasingly as a way to entice borrowers to come to them directly, particularly for straightforward remortgaging.
With the use of application programming interfaces to help gain access to the applicant’s bank accounts, more traditional ways of underwriting could perhaps become less used.
However, like any legislative changes that impact our market, open banking will provide a range of both opportunities and challenges for intermediaries. Although the majority of these are not expected to materialise overnight, it is worth brokers spending time investigating potential issues, and seeking out benefits in advance to avoid missing crucial opportunities to thrive in the market.
To compete with this potential challenge, intermediaries need to keep pace. This can be done by maximising their key strengths to ensure problems are overcome and opportunities not lost. The latter include, for example, the ability to build strong relationships with clients — which is the cornerstone for establishing trust — and the fact that they can give credible advice.
Mortgages can be fairly complex for the customer to understand but, with reliable and personable financial advice, they don’t need to be. So the old-fashioned personal touch will help mitigate the threats.
Open banking may offer other opportunities too, such as speeding up the application process by using APIs to access financial data directly, rather than relying on humans to verify income, for example.
If this happens, the process will free up time for intermediaries to do what they do best: deliver advice and strengthen relationships with clients.
Open banking is likely to bring changes for lenders, intermediaries and their clients. How these changes evolve will need to be monitored but, for the time being, it would be wise for all intermediaries to keep abreast of developments and focus on their core skills.
Mark Lofthouse, chief executive officer of Mortgage Brain
There’s a general consensus that the introduction of open banking will be one of the biggest developments the mortgage market has seen. The initiative is designed to speed up the process of applying for a financial product through the free flow of information, and ultimately to give consumers more control over who has access to what in relation to their finances.
The mortgage market is entering a new era and I’m sure there will be hurdles to overcome and benefits to secure. I don’t, however, think that open banking will have a negative effect on brokers and advisers.
Brokers often spend a huge amount of time trying to understand a client’s specific financial history and future needs, which enables them to properly assess their financial circumstances. It’s important to remember both the role a broker plays in the mortgage advice process and the reason why consumers go to them — choice, knowledge and advice. With over 70 lenders and more than 10,000 mortgage products available, finding the one that best suits a customer’s needs is not a trivial task.
Now, more than ever, a broker’s knowledge, experience and understanding of the market — and all its nuances — will be at the fore and continue to play a crucial role in helping their customers find the right product for their needs.
Technology has played a pivotal role in improving the process, particularly over the past couple of years with the development of digital fact-finds and online client portals. Working hand in hand with the latest technology solutions, open banking will help to streamline, enhance and speed up the information-gathering process even further.
Even while still in its infancy, open banking has the potential to further improve the mortgage application process and will be to the benefit of brokers.
Remember that customers use the services of professional mortgage advisers so that they can buy a new home or remortgage their existing one. The majority of borrowers do choose to use our services and open banking will not change the underlying reasons for this.