CDR poses risk and opportunities for brokers

While CDR and open banking could pose a risk to brokers retaining their clientele, their value proposition would lie in the insight and advice they offer to their clients, according to the industry.

The open banking regime was recently extended to allow customers of the four major banks to share their home loan and mortgage offset data to accredited recipients under a new stage of the Consumer Data Right (CDR).

The expansion of the regime, which has been operational by the major banks since 1 July 2020, adds to the number and type of account data that consumers can share under the CDR.

The product lead of the Finder app, Ben Nicholls, recently addressed the challenges the CDR and open banking regime could pose to brokers and their commercial model of trail commission.

Speaking during a webinar panel discussion on the future of mortgage lending, hosted by Finder, Mr Nicholls said that open banking and the CDR tool could not only enable a proliferation of refinance activity among borrowers, it could also drive borrowers to approach lenders directly for refinancing rather than use the services of a mortgage broker as the conduit.

“A big chunk of [brokers’] back-book portfolio might [go] directly to lenders because they’ve got this open banking and refinance platform,” Mr Nicholls said.

However, the industry also believes that the CDR and open banking could hold opportunities for brokers.

CEO of Choice Aggregation Services Stephen Moore told a recent Mortgage Business webcast about The advent of digital mortgages that the future of the broking industry and financial services would centre around data and digital tools.

“Brokers are really in the box seat when it comes to the future with open banking because open banking is ultimately about providing a better outcome for consumers by driving competition,” Mr Moore said.

“As we know, brokers are the key drivers of competition. We also know that brokers know their customers more than anyone else across the value chain in financial services, individual personal circumstances, their family, their aspirations.

“What’s missing now is that rich data that is typically being monopolised by the particular provider.”

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Source: CDR poses risk and opportunities for brokers – Mortgage Business