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The modern world of 2018 has brought forth plenty of now seemingly irreplaceable conveniences, like Uber Eats and AfterPay. Your Friday night indulgence in luxury, convenient takeout, and buy now pay later online shopping could revisit you later when applying for credit. For some, this may come as a surprise, but don’t worry, Nifty Loans is here to set the record straight.
The latest chitchat
The latest news in banking is that your cheeky Uber Eats indulgence will come under review when applying for a home loan. The way banks assess your loan application is about to change. Soon, all banks will transition to ‘open banking’, realigning what banks look for in an application for a loan.
Currently, banks look at grocery bills, medical expenses and utility bills, however, soon your digital delicacies will also be under the microscope. Don’t run away scared yet, or swear off the luxury of convenient eating. Instead, let’s dive into what open banking means for you and your Uber Eats addiction.
What is open banking?
Officially, open banking is hitting Australian banks in July 2019. First and foremost, open banking means the protection of consumer data, granting them more power over their data. In the words of the former Treasurer, Scott Morrison,
“Open banking will revolutionise the financial services sector, completely transforming the way Australians interact with the banking system by giving consumers the right to share their data with other banks, other institutions and innovative fintechs, and get themselves a better deal.”
Open banking brings power back to the consumer, however, it also opens a new avenue for more comprehensive checks, as more data becomes available. Introducing open banking sets a precedent for the long-debated concept of data ownership. Whether the data belongs to the consumer or the organisation that collects it. Open banking hedges both parties, the bank can access your data, however, only with your explicit permission.
Advantages for the consumer
After the media frenzy circulating around Uber Eats, loan approvals and open banking, you may be wondering what the advantages to open banking are for the consumer? Well, it’s a good question, and there a couple of key advantages that could reinvent how we, as consumers, interact with banks.
Easier to switch banks
Introducing open banking creates a Narnian-like gateway for consumers to easily switch banks. Of course, right now customers have the right to switch banks, however, it’s time-consuming and leaves many customers with headache after headache. Open banking grants you the power to relocate your data with ease. It won’t be completely frictionless, but it will certainly simplify the journey.
Know your options
Making it easier to switch banks begs the question, why would you switch banks? Well, to get a better deal of course! What open banking really does is give us more opportunity to shop around (and who doesn’t love shopping), and hunt for the best bargain. With open banking, we can give another bank access to our data to see what they could offer for a home loan, credit card, or short-term loan.
So, open banking isn’t all bad. It doesn’t just mean that banks can now reject your home loan based on your indulgent Uber Eats habit. Open banking is a change to the banking landscape, a chance for us to reinvent what it means to be the customer.
Now let’s look at what all the fuss is about when it comes to the banks examining your intimate Uber Eats diary and other indulgences and how it could affect a loan application.
Recently, Nifty Loans conducted a poll via our Facebook page, where we asked our audience,
Did you know that big banks look at your indulgent eating habits, like Uber Eats, when assessing a loan application?
From the poll, 79% of respondents elected they didn’t know that banks were going to start looking at digital spending habits like Uber Eats. So, clearly, we need to know more about what banks and lenders look for when they assess an application.
From the perspective of a lender, let’s get to work and clear up some of these misconceptions!
Expenses to keep an eye on
In light of open banking, there are some expenses that consumers should keep an eye on. However, you may not be able aware of some of the expenses lenders and banks already look at. So, let’s set the record straight.
Let’s be honest, we all love having food appear at the touch of a button. After a long day, the prospect of someone not only making your food but also delivering it in nice package straight to your doorstep is all too tempting. However, those late night feeds may lead to a loan rejection later on. With open banking, if you give the bank your data, they’ll start looking closer at digital spending.
In the last few years, digital spending has inspired a new market landscape to shop till ya phone dies. It can, however, have lasting effects on your ability to borrow credit, so just keep a keen eye on those sneaky late night dinners.
Buy now pay later services like Afterpay and zipPay let you shop without spending a dime. However, banks and small-time lenders (like Nifty) are wary of clients with a stack of Afterpays on the go. So, before you unleash your credit card, keep that in mind if you’re planning to apply for some credit anytime soon.
If you subscribe to the philosophy that the more gym memberships you have, the healthier you are, it may affect the health of your loan application. With open banking, big banks may look at your continuing commitments to check your financial commitment levels. So, for the sake of your wallet and perhaps your loan application, maybe ditch the second gym.
Much like gym memberships, streaming subscriptions like Spotify, Netflix and Stan will also be up for debate. If your bank statements look a lot like other Aussies, then you may have a fine collection of subscriptions to suit all your needs. However, if you’re looking to apply for a home loan or credit card, it might be best to start picking your favourite subscriptions and getting rid of the others.
If you find yourself taken by the numbers every week, a prospective lender may take that into consideration when assessing your application. The odd Lotto here and there is harmless, sometimes the possibility of 40 million is too tempting to resist. However, if it becomes a habit, it won’t go unnoticed by the bank or other lenders.
Open banking is altering how banks and lenders look at your expenses, however, gambling habits have always been up for grabs. Similar to Lotto, if you dabble in gambling every now and again, then it probably won’t reflect in your loan assessment. However, if Sportsbet is your most frequently used app, there may be a problem.
When lenders assess your application, they look to see if you can afford to repay your loan. And a gambling habit can send all the wrong signals.
Surprised by any of these expenses? As we venture into a new world of open banking, and more extensive look at your spending habits, both digital and physical – it can be alarming. However, don’t hit the panic button just yet. Before you apply, just make sure you’re informed.
Transparency is in the spirit of open banking, and for the big banks it means moving forward and leaving old traditions behind, but for us Fintechs, it means it’s time to step into the spotlight.
Where does Fintech sit?
Fintech is simply a fancy way of saying technology that improves financial services, like banking, investing, and lending. Emerging Fintechs are in a position to offer an alternative to big banking. And with the help of open banking, Fintechs are growing. For Fintechs, open banking levels the playing field, with a more immersive access to data, Fintechs can finally sit at the table with the big banks.
Financial technologies are certainly not very sexy, but emerging ideas and innovations could slowly change the way Aussies interact with money, including where you put it, how you spend it or how you borrow. And that’s where Nifty Loans comes in.
How Nifty is different
Nifty Loans is amongst the emerging Fintechs looking to make life a little easier for everyday Aussies. And when we mean life, we mean accessing an extra bit of cash when you need it most. Nifty Loans works in the spirit of open banking. We do our best to apply transparency for all our clients. So, we’ll give you a good idea of what our team look at when they assess your application.
When assessing your application, we consider some of the following expenses:
- Gambling habits
- General expenses
- Buy Now Pay Later purchases
Subscriptions like Stan and Netflix, we include in our general expenses calculation. So, we don’t look at your individual subscriptions as separate financial commitments. You can rest easy, your Uber Eats scrutiny is not up for debate when you apply with Nifty Loans.
When you apply with Nifty Loans, we want you to know exactly what we do. So, if you have any questions about how we access your application, don’t hesitate to contact our team at firstname.lastname@example.org or give us a call on 1300 471 328. Otherwise, you can browse our website and find all the info you need.
Let’s be friends
Want to know more about how your Afterpay habit could affect your loan application? That’s easy! We have an entire blog post dedicated to that exact question. Check out a few problems with everyone’s much loved buy now pay later services.