Moneycatcha founder on how fintechs can help banks and brokers slash turnaround times
The process of buying a home has been a fundamental mess for quite some time in Australia, with the end-to-end property buying process in most states of Australia takes around 40 days.
This problem is magnified by the amount of outsourcing to third party providers and an ‘assembly line’ approach that financial institutions (FIs) take to complete the processing of loans. In addition, it has been plagued by a lengthy conveyancing process, lack of access to reliable financial data and the individual bank’s finance processes.
After ten years of having the PEXA solution in the market, the government has recently taken the lead in trying to solve the conveyancing process by mandating the use of the PEXA platform to enable digitised and incredibly fast conveyancing. However, it is not until the conveyancing world and banks alike, fully embrace all the capabilities of the PEXA platform that a major part of the mess will be solved.
The next step, is that FIs must embrace open banking to access transparent and reliable data about a client – a necessity that has been fully endorsed and encouraged by the government.
Finally, banks need to completely rethink and reshape the way they originate home loans. There needs to be a complete refresh of the technology used to solve the mess caused by these problems that exist in every step of the end to end process. To date, they have focused on fixing small parts of the process, which has provided incremental gains but hasn’t changed the overall over-processing time in more than twenty years.
Indeed, many FIs are undergoing ‘mortgage origination transformation’ projects as part of their 2017 strategies, but are they willing to be innovative and embrace transformation technology unless it’s mandated like in the case of PEXA? Should we have to wait another ten years for the government to intervene to change the experience for average Australians, when the technology already exists in the market today?
Recent media articles suggest that banks are currently reluctant to embrace fintech solutions to solve this problem, even though there are many on the market with the technology already built to assist them. Their more traditional, risk-adverse approach stands directly in the way of innovation that could revolutio
nise the experience for consumers, brokers, banks and regulators, driving improvements in speed efficiency and security.
This belief that the risk is high to adopt new technologies provided by the fintech community can be mitigated in many ways and any responsible fintech company should be willing to deliver their solutions in line with regulations and guidelines set by bodies such as ISO, APRA, and ASIC.
Moneycatcha has invested hundreds of thousands of dollars in our technology, security and compliance processes and sought the expert advice and support from trusted firms like KPMG to assist with our governance processes. We have also received grants from government agencies like Landgate in WA, who have strict criteria about how the emerging tech has to deliver tangible gains to the community in a responsible and compliant way.
Even though we are a start-up company, our policies and procedures, coupled with the combined Big 4 bank experience of the Executive team means we can be just as competitive and compliant as a big-name technology firm.
There have been cases in the past where banks have written off millions of dollars of IT spend from their balance sheet due to adopting a solution provided by a more traditional software provider that was ultimately deemed unsuitable. That type risk can almost be completely avoided when banks collaborate with fintechs to build their bespoke solution together.
We’ve had over 35 conversations with different FIs in 2017 and we have a handful of amazing, progressive banks who will absolutely dominate the market in the near future with their revolutionised service proposition because they took a different approach to innovation.
It’s time for a change and to sort this mess once and for all.
Ruth Hatherley is the founder and CEO of Moneycatcha, which uses blockchain technology to speed up the process of mortgage origination, from 42 days to five. Previously, Hatherley worked for Mortgage Choice and Commonwealth Bank.