A start-up backed by Westpac and National Australia Bank has developed software to read bank account data and automate the loan assessment process for banks, allowing them to base lending decisions on actual customer spending rather than relying on estimates and indexes.

Basiq'​s system is being used by Regional Australia Bank, whose chief risk officer Campbell Nicoll says asking customers to estimate spending in various categories during an application process no longer cuts it.

"People have just been guessing their expenses," he said. "But Basiq plugs into our bank, extracts two years of transaction data, categorises it - and that and gives us the true picture on expenses."

For the full story head to the Australian Financial Review.