Michael Hunter is the co-founder of Holo
Open banking is a term we have been hearing a lot over the past three years, since the concept emerged as a means of allowing third party access to banking and financial accounts. The initiative aims to increase information-sharing between financial institutions, in order to make new financial products and services more accessible to individuals and businesses alike. It also promotes greater transparency by allowing new and dynamic ways for consumers to track and control their finances.
This is more important than ever in light of the recent Covid-19 pandemic, which has pushed many customers to take a step back and reassess their financial health. In doing so, they face the hurdle of only being able to access limited, individual bank accounts, rather than a holistic view of financial activity, which naturally lends itself to more flexible and agile options. In addition, open banking significantly decreases the processing times of banking applications, as the need for multiple KYC and AML checks are reduced.
So, what does this mean for property buyers in the UAE? A study conducted by Colliers in the second quarter of this year showed that 91 per cent of real estate purchasers were made by first-time buyers, indicating a huge appetite for buying over renting. In turn, this has fuelled a rise in demand for home loans, with 1,189 mortgage transactions worth US$2.8 billion in Dubai during the month of August 2020 alone.
Having said that, for many wanting to make this transition, one of the main barriers to purchasing their dream property is selecting and securing the best financing product. The process can be complex, arduous and overwhelming.
We have already begun to simplify this process at Holo, through a secure algorithm-backed platform that gives prospective buyers access to a full range of unbiased mortgage and remortgage options that meet their specific needs, within minutes. Now, imagine what we could do if an applicant’s eligibility could be predetermined based on full visibility of their credit history, spending patterns and savings, without them even having to fill in a form?
Of course, this comes with its own set of challenges – namely, data security. Understandably, customers would raise a red flag when thinking third parties could have access to their personal and banking information. This is where regulators, brokers and financial institutions must all play a part in ensuring the right guidelines and infrastructure is in place to ensure the protection of the end user. We are witnessing a surge in the number of fintechs building platforms that enhance the customer journey, but without a framework to support open banking in its fullest capacity, the experience will remain one dimensional.
The onus is on all of us, as members of the country’s financial ecosystem, to contribute to the progress of this sector – whether it means governing authorities putting parameters in place to allow secure data sharing, innovative companies exploring new backend systems to facilitate or brokers helping to assuage customer concerns by effectively explaining the process. We at Holo are certainly looking forward to collaborating with our peers, wherever necessary, to make this a reality.
Wamda has invested in Holo