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Further interest rate cuts are anticipated throughout the year, making Australians more optimistic about buying property, with a third saying the interest rates make them more confident to buy.
Borrowers are also getting savvier with their mortgage management, with many proactively researching and reviewing whether they are getting the best loan on a regular basis. With an ongoing cost-of-living crisis, this commitment to looking for the best financial option is likely to continue.
Banks and non-bank lenders alike have the growing challenge of needing to compete for customers who are willing to jump to the provider with the best rates and who are increasingly turning to digital and online information sources to ensure they’re minimising costs and bills, where possible.
Harnessing the CDR to stay competitive
The Consumer Data Right (CDR) is too often overlooked and misunderstood by the industry as merely a compliance box tick exercise. In reality, it’s one of the few immediately available and tangible opportunities that could shift the dial for lenders wanting to reach more customers.
The CDR enables lenders to share their data in a transparent and up-to-date manner. While this may seem simple, it’s critical in today’s digital landscape and most lenders are yet to capitalise on the CDR’s full potential.
Consumers are consistently and proactively online, searching and cross-referencing how to get their best deals, and will typically settle for information they find on comparison sites and sites that leverage the CDR. If your financial services are not included for comparison, your ability to compete with peers or even bigger players is gone.
Non-bank lenders, in particular, are competing for consumers’ headspace and attention as major banks sustain a stronghold on market share. The easiest way to be accessed alongside the largest financial service providers in the country is to get into the CDR ecosystem and make it as simple as possible for consumers to find, compare, and purchase your services.
Turning compliance into innovation
As well as being compulsory for many banks and non-bank lenders to comply with the CDR, the framework has been designed to enable greater choice for consumers, while supporting innovation across the financial services sector.
Despite the many advances in digital financing, most borrowers would agree that finding the best home loan available is still a lengthy, convoluted, and often manual process that requires extensive personal information and data to be shared. The complexity and level of personal details involved also present countless privacy and security risks to both the lender and borrower.
The CDR was built with extensive privacy and security protections in place to enable seamless data sharing between providers and users of the ecosystem. Instead of needing to share excessive personal information with multiple vendors, manage the back and forth with each vendor, and conduct individual assessments of each service provider, consumers can instead opt in to share their data with a finance app, review their options within seconds, make a decision, and then come back to repeat this process any time they want to check they still have the best deal.
For the industry, this means less paperwork, less admin, and less time-consuming communications with customers before they make a decision. This presents opportunities to elevate staff and resources previously focusing on repetitive or manual tasks to working on higher value and innovation-oriented products and services. Ultimately, lenders are enabled to provide faster access to capital, more efficient digital loan experiences, and more customised or flexible loan terms based on the data shared by the customer.
Lenders should no longer be on the edge of their seat, waiting for the RBA to make an announcement and then be prepared to follow with a cut or rise in rates. With digitally savvy and cost-conscious customers more than happy to change providers if the price is right, lenders should instead be looking to the CDR as a way to be always on, ever-present, and consistently competitive alongside every other service provider in the market. The CDR isn’t just a way to keep up with best practice in data, privacy, and operational processes, but it’s lenders’ best bet at growing their customer portfolio and staying relevant in this era of digital finance.
Jessica Booth is the chief operating officer at Biza.io.