See an article in the Australian Financial Review on this topic.

Basiq’s newly released affordability report enables lenders to verify customers’ expenses based on real bank transaction data.  Regional Australia Bank have partnered with Basiq to provide input into this innovative new tool for their home lending specialists.

According to the AFR “Banks have traditionally used the  "household expenditure measure" (HEM) as a default measure of spending but Commissioner Hayne said this "does not constitute any verification of a borrower's expenditure". Verification also "calls for more than taking the consumer at his or her word", he said.” In fact, according the UBS, 70-80 percent of all 2017 home loans in Australia use the HEM benchmark instead of declared or any kind of verified expense analysis.  

In addition to using the traditional HEM benchmark, Regional Australia Bank home lending specialists can now use actual amounts for living expenses based on real bank transaction data.  They use this information to help establish immediate trust and transparency with the customer. Given they already know where and how the customers spend their money, it means that they don’t have to ask personal questions that can’t easily be answered.

This allows their lending specialists to then focus on value-add conversations rather than spending a third of their time on applications. It has remove the need to verify income and expenses using manual payslips and bank statements to attach to the application,  which is a big win for the customer - who has a much more seamless loan application experience.

Campbell Nicoll, Chief Risk Officer, from Regional Australia Bank says "It is still early days but we anticipate this enhanced capability, and the higher-quality conversations we are able to have with our customers. As a result, it will improve overall assessment accuracy, reducing bad debt and contributing to bottom line savings in the order of tens of thousands of dollars annually.”

The collaboration puts Regional Australia Bank in the unique position to take advantage of Basiq’s Open Banking platform when the Banking API’s become publicly available.  They are already taking advantage of bank transaction data and in the future, they will be able to make decisions based on aggregated information across all of their customers’ bank accounts.  

How to get the Affordability API

Reach out to us to learn more about our APIs, direct integration and our user interface controls to seamlessly drop into your current workflow.

Check out our API docs for the Affordability endpoints: https://api.basiq.io/reference#affordability and use our sandbox environment for free - contact us to have your API key activated.