Regtech Dovetails with ASIC Responsible Lending Push
(25 August 2020 – Australia) The Australian Securities and Investments Commission (ASIC) is encouraging lenders to invest more in credit approval systems powered by Regulatory Technology (Regtech).
Regtech solutions that help lenders and brokers more efficiently assess credit files and risk profiles have ‘the potential to improve performance across the lending industry’, the financial services regulator stated. ASIC praised the new breed of financial technology (fintech) firms able to assess and approve the necessary documentation for loans in under an hour, with current aggregation tools offering the capacity to rapidly and accurately collect, analyse and contextualise consumer data.
ASIC called out banks to lift their game, marking the regulator's first official comments regarding responsible lending since it prematurely ended its ‘wagyu and shiraz’ case brought against Westpac.
“The benefits of investing in a digital credit assessment process were obvious, delivering faster approvals and new efficiencies. Now compare this to the 64 days it takes some traditional institutions to approve similar loans. It is remarkable to think that regulators are often blamed for red tape blockages, when in fact the capability to harness and tap into technology to accelerate positive customer outcomes lies within entities, if they choose to invest in and develop it” said ASIC Commissioner Sean Hughes.
“The credit industry continues to evolve, and while the focus in the current macroeconomic environment is necessarily and primarily addressed on ensuring credit flows quickly and efficiently to borrowers, customers are also expecting seamless digital interactions and experiences with their lenders. Since the escalation of the COVID-19 pandemic this year, we’ve seen a rapid acceleration of pace at which these changes can, and are expected, to occur. Particularly so and right now in the midst of a pandemic, it matters even more that we ensure that consumers are protected by entering into loans that are ‘not unsuitable’, to use the statutory language” Mr Hughes stated.
“In one case, an organisation pointed out that analysing consumer household expenditure took between 80 to 90 per cent less time when conducted digitally as opposed to manually. That same entity was able to fully approve a number of customers’ loans, and deliver the necessary documentation to their inboxes, within 58 minutes” Mr Hughes added.
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