Being digital in today’s mortgage market is about more than having a ‘cool’ website, a social media strategy and an app. It’s about pioneering innovative technology, trialling automated systems and developing integrated platforms to make the end-to-end mortgage application process more efficient for brokers and consumers alike. One digital possibility that is promising to positively shape the specialist banking arena is Open Banking.
 

Evolution rather than revolution?

While many of the UK’s largest banks and building societies have been fairly slow in adopting this initiative and providing associated APIs, Open Banking still has the potential to shake up the industry as we know it.

In the specialist lending space, we are already seeing:

• customers and small- to medium-sized enterprises (SMEs) sharing banking data with other third-party providers
• transaction history being made available through Open Banking, which can then be used to perform affordability checks, verify income and increase the number and type of borrowers eligible for loans

And, in the not too distant future, we will start to benefit from: 

• fully integrated online processes to verify affordability and income; no physical verification will be needed
• the reduced need for re-keying information; data will be retained, reused and auto-filled to dramatically speed up the entire sales process
• less of a reliance on paper documentation, meaning less friction, particularly around credit processing, which will create a much more agile customer journey 
   

Should specialist banks embrace Open Banking?

Specialist banks should absolutely be embracing Open Banking. Once APIs become more readily available, increased collaboration and access to more and improved data will mean that we can really go the extra mile to provide customers with digital ecosystems and grow this market further. 

The challenge now is to effectively communicate these changes to consumers, turning them from concepts into something tangible, while creating relationships and spotting opportunities to harness the benefits they will bring.
 

How can specialist banks use Open Banking to differentiate from mainstream lenders?

High street banks are increasingly utilising Open Banking and APIs, particularly through platforms such as mobile apps. This is arguably where we have seen the biggest Open Banking advancements from mainstream lenders, providing users with a tool to view all of their finances in one place. However, in terms of product, service and collaboration opportunities, there is still a real gap here for smaller banks to take advantage of. 

Equally, while some of the mainstream lenders are already using bots and automated processes to deliver products and engage with customers, in reality, banking is personal and, at times, emotional. I actually think consumers want to see a greater focus on the human element when they bank. Masthaven is trying to achieve this balance by using tech when we need it, but also remembering that the human touch is still greatly prized.

Ultimately, as the saying goes, all good things come to those who wait, and once APIs become more readily available, more innovative and custom-centric opportunities will emerge. I am excited about the impact that Open Banking will bring, particularly in the SME sector, where increased collaboration between new entrants and access to more and improved data will bring a range of new opportunities.