2023 Roundup: Mortgage Makeover with Open Banking

Table of Contents

How Open Banking is Altering Australia's Mortgage Mindset

Forget the days of mountains of paperwork and endless phone calls for your dream home. Open banking, Down Under’s version called the Consumer Data Right (CDR), which was launched in 2020, is shaking up the mortgage industry in Australia. Open banking is no longer nibbling at the edges with budgeting apps and account aggregation. This is a full-blown transformation, going straight to the heart of mortgages and flipping the script on the entire industry value chain. 

Picture this: Australia’s A$2T ($1.4T) mortgage industry (that’s right, trillion with a T!) finally embracing the power of open banking. Banks, non-bank lenders, savvy mortgage aggregators, even your friendly neighbourhood broker – everyone’s jumping on the open banking bandwagon. They’re not just passengers, though – they’re actively driving a revolution that’s changing the way Australians think about and manage their mortgages. 

The Big CDR Push in the Mortgage Industry

Digital Mortgage Platforms are online systems set up by banks to make getting a mortgage quicker and easier. You can apply for a mortgage, upload documents, and even get approval, all online. These platforms use technology (Open Banking, Data Analytics, AI, etc.) to speed up the process, making it more efficient and user-friendly.

Why are mortgage providers and consumers eagerly adopting CDR?

Supply Side Trends: Banks and Mortgage brokers

  • Digital Mortgage Platforms: Have you heard about the Big 4 Banks in Australia – CBA, Westpac, ANZ, and NAB? They’ve set up digital mortgage platforms that make getting a mortgage faster, all thanks to the usage of CDR data.
  • Efficiency in Service: CDR makes the whole mortgage process smoother and more tailored to what customers need. And several mortgage aggregation and lending technology platforms have embedded CDR-data sharing in their offerings. 
  • Tailored Financial Products: Mortgage brokers are now using CDR to get better insights into their clients’ needs. This helps them give more personalised advice and keep their customers happy.
  • Enhanced Risk Assessment: CDR helps in creating better loan models by using up-to-date information directly from customers’ financial accounts.
  • Regulatory Compliance and Trust Building: By following CDR rules, banks and brokers are earning more trust from their customers and staying on the right side of regulations.

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A Trusted Advisor in the mortgage industry is someone, like a mortgage broker, whom you can share your financial details with confidently. They use your data to guide you towards the best mortgage options. Think of them as your personal guide in the complex world of mortgages, someone who uses your financial story to find the perfect fit for you. Trusted advisers also include financial advisers, accountants, tax agents, lawyers, etc. 

Demand Side Trends: Prospective buyers and current homeowners

  • Sharing Data with Mortgage Advisors: Since February 2022, new CDR rules have let people share their financial data with trusted mortgage advisors, leading to better advice and choices.
  • Limited Eligibility: CDR data provides lenders with a richer picture of consumers’ financial health, beyond just the credit score. This can help them assess consumers’ true affordability and potentially open doors to mortgages that consumers wouldn’t have qualified for before.
  • Lack of Transparency: CDR data empowers consumers with greater transparency. consumers can access and compare mortgage products from different lenders in real time to make informed decisions based on their specific needs and financial situation.
  • Data Privacy and Security: After big data breaches, like the one at Optus, people are looking for safer ways to share their data. CDR offers this security.
  • Seeking Better Refinancing Rates: In times of high interest, CDR helps people find better refinancing deals by providing detailed financial data.

The Optus breach was a major cybersecurity incident in Australia. Optus, the country’s second-largest telecom company, faced a breach in September 2022 where the personal data of around 10 million people was compromised. This included sensitive details like names, addresses, and ID numbers. It was a wake-up call for many on the importance of data security.

2023 - The Year of the Aussie Mortgage Marvels

2023 saw open banking, i.e. CDR, shake up the Australian mortgage scene in a big way. Banks, brokers, non-bank lenders, tech platforms – everyone jumped on the CDR-based data-sharing bandwagon to reimagine the mortgage process.

Infographic design showing a house in with logos of financial layers who are transforming the Australian mortgage space through open banking
  • Big banks step up: Bigwigs like Commonwealth Bank (CBA) and Westpac embraced CDR. CBA teamed up with NextGen to give mortgage brokers access to open banking magic, while Westpac used it to peek into other banks’ data and assess borrower income in a flash.
  • Brokers join the party: My Local Broker and Loan Gallery didn’t miss the dance. My Local Broker partnered with diñeiro to offer clients a white-labelled open banking platform for a complete financial snapshot. Loan Gallery teamed up with Effi to introduce the ‘Savings Tracker’ under their brand. This tool is positioned to help mortgage brokers provide first-time home buyers with customised savings plans to help them buy their first home faster.
  • Tech platforms get in the game: A bunch of technology platforms collaborated with Open Baking data aggregators (also called Accredited Data Recipients or ADRs in Australia) to embed CDR-based data sharing in their technology offerings. Finsure and AMP Advice partnered with Frollo; Regchain Stryd and Hound partnered with Adatree; Moneysoft AU, Diñeiro, and Effi partnered with Envestnet | Yodlee to bring open banking to a mass of brokers and lenders. 

2024: Navigating Mortgages Without the Paper Chase

In the current landscape of volatile interest rates and a cautious approach by banks, the financial terrain for borrowers is challenging. Increased costs have led to a reduction in risk appetite, prompting banks to scrutinise potential borrowers more closely and potentially introduce upfront fees or demand higher deposits for fixed-rate mortgages. However, amidst this challenging scenario, the emergence of open banking offers a silver lining. 

In a market where consumers bear significant financial responsibilities, open banking emerges as a potent tool. It is empowering individuals to manage their financial data and gain the assistance required to navigate the intricacies of the home-buying process in the current economic landscape. 

And 2024? Think exciting leaps in the mortgage world thanks to open banking and its data magic. Faster processes, personalised deals, and a more inclusive system – open banking’s just getting started, and it’s ready to help you walk (or skip!) your way to your dream home. Buckle up, because the future of mortgages is looking brighter than ever!


Founder & CEO | sanjeev@whitesight.net

Sanjeev is a fintech aficionado who loves to explore the depths of the industry as much as he loves to explore the depths of the ocean in his scuba gear. He is the founder and CEO at WhiteSight, bringing a wealth of research and advisory experience to the fintech world.

Fintech Analyst

Samridhi is a fintech analyst within the WhiteSight team, researching fintech trends and providing insights into everything from new markets and investment opportunities. Just like she connects the dots to reveal the big picture of the ever-evolving fintech landscape, she has a keen eye for discovering the brushstrokes of Madhubani paintings and the contours of the hills.

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