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Using open banking to enhance lending

The fintech firm Bud has signed a deal with New Zealand's largest bank ANZ NZ, in a move that marks the beginning of a strategic push in the Australia and New Zealand markets.

The deal will see Bud providing ANZ NZ with the capability to ingest and categorise data from prospective borrowers’ bank statements in a bid to streamline the lending process and increase transparency.

Making the most of new regulations

The move is driven, in part, by changes to regulation in New Zealand. New regulations under the Credit Contracts and Consumer Finance Act require lenders to capture and verify borrowers’ income and expenses in detail in affordability assessments. 

The strict rules aim to ensure lenders are satisfied that repayments on loans won’t place borrowers into substantial hardship. For many lenders, the new rules will add significant manual overhead to lending decisions. However, ANZ NZ has chosen to automate elements of the process to create a simpler and more transparent experience for customers.

Bankers will upload borrowers’ statements during the loan application process to comply with the new regulations. Bud’s Intelligence tool will be used to enrich that statement data, identifying and categorising income and expenses, and returning a summary to ANZ NZ for use in its affordability.

Reflections on the deal

Across the world, the COVID 19 pandemic has added a new level of complexity to lending decisions as credit file masking, career changes, furlough schemes and sector-specific risk factors combine to create real disruption in the market. There has never been a more important time for the kind of transparency that a more open approach to financial data can bring to the lending process.

“We’ve seen Open Banking start to have a significant impact on the credit market in the UK, so we’re obviously excited to be the first to roll out similar technology in New Zealand," commented Ed Maslaveckas, Bud’s CEO. "We’ve put a huge amount of effort into creating technology that offers leading innovation whilst maintaining the highest standards of privacy and security infrastructure demanded by banks. We’ve invested heavily in our intelligence capabilities over the last year, developing the granularity and accuracy that institutions need to shape these journeys and developing tools that allow us to quickly port that performance level to new markets. Aside from our obvious excitement to be working with such an established brand, it’s particularly encouraging to see the work we put into these two areas start to become a benchmark for those fintechs who want to work at enterprise scale.”

ANZ NZ chief information officer, Mike Bullock, added: “ANZ NZ is committed to progressively utilising open banking and open data to deliver better products and services for our customers. Bud’s expertise with open banking technology in the UK market will benefit customers in New Zealand by streamlining lending processes and increasing transparency. Importantly, the functionality BUD provides will also enable us to continue to meet our responsibilities as a responsible lender, without compromising customer experience. We’ll be able to collect and verify the extensive income and expenses information the new consumer credit regulations require, so we can continue to provide the right outcomes for our borrowers without unnecessarily slowing down the lending process.”

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