Simple Bank Account Origination

[markverstege]

Context / Problem Space

The addition of Action Initiation to the CDR regime is nearing completion in the parliament. One of the obvious use cases to consider for Action Initiation in the banking sector is the initiation of an account origination process.

The origination of a financial services account can be highly complex and may involve identity verification of the customer, credit decisioning and fraud checking. It also involves complex regulatory obligations such as Anti-Money Laundering and Counter Terrorism regulations, among many others.

It would be advantageous to identify a relatively easy path for the introduction of account origination for the banking sector that could be adopted with minimal regulatory or implementation overhead.

An experiment has been proposed to explore this opportunity and several existing CDR participants have expressed interest in being a part of the experiment.

Use Cases

The specific use cases that will be targeted are as follows:

• The initial application for a new to bank customer applying for a retail mortgage
• The initial application for a new to bank customer applying for a retail credit card
• The initial application for a new to bank customer applying for small business lending

These use cases were selected to cover a cross section of the CDR consumer base and varying levels of application complexity. New to bank has been identified primarily to reduce the cost of the experiment by removing the need for authenticated endpoints.

Hypothesis

The hypothesis to be tested by the experiment is as follows:

• The addition of fields to the existing banking Product Reference Data that describe the information that a specific bank will need for a customer to successfully apply for a product would reduce the overhead of a service that wishes to integrate with many different banks.
• An account origination API that is considered a “Warm Lead” by the bank, and does not assume any previous regulatory or validation steps have taken place, would be relatively low risk, a relatively low regulatory burden and still have an acceptable customer experience.
• An account origination API that passed the application into existing business processes and does not require ongoing customer interaction via the initiating client would have a much lower implementation burden for banks but still have an acceptable customer experience.
• LIXI data models will be incorporated to reduce implementation costs for participants.

Methodology

The experiment will be conducted in the following four phases:

Phases

Phase 1: Planning

Initial kick off meetings and validation of this execution proposal (with a clear expectation that this document will be updated as a result)

Phase 2: Standards Development

A 4 to 6 week period where the experimental standards used to implement the experiment will be developed and amended by experiment participants. The bulk of effort during this period will be the responsibility of the DSB.

Phase 3: Build

A one week period where assigned developed will build mock versions of the standards and clients of those standards to demonstrate their use. This will need to include both mock API and mock CX build to be able to demonstrate the defined flows of each of the use cases.

Phase 4: Review

A post execution review period where findings can be collated and a final review will be created for publication.

Participant Responsibilities

Involvement in the experiment is entirely voluntary so the effort required has been minimised. For the experiment to be successful it will be necessary that a minimum commitment of resource is made by each participant. This section outlines what this minimum commitment is likely to be along with the expected contributions of each participant.

Resourcing

Data Standards Body (DSB)

The DSB will provide the bulk of the supporting resource to facilitate the experiment. This will include:

• Developing the experimental standards during the Standards Development phase
• Facilitating meetings and communication channels
• Writing the outcomes report in the Review phase

Action Initiation Participant

A participant acting as an action initiator (ie. a client) would be required to:

• Provide feedback on the experimental standards during the Standards Development phase
• Build an example user experience demonstrating a customer applying for a product in each use case
• Have the example user experience call the experimental endpoints to make a product application and show the result of the application

It is expected that each Action Initiation Participant will provide:

• a technical analyst or architect to engage part-time during the Standards Development, Build and Review phases
• one or two developers during the Build phase
• a test infrastructure environment to host the experimental build that can access the Action Service Provider endpoints

Action Service Provider Participant

A participant acting as an action service provider (ie. a data holder or server) would be required to:

• Provide feedback on the experimental standards during the Standards Development phase
• Build the mock endpoints defined in the experimental standards that produce sample responses
• A user experience to handle the post application aspects of any experience defined in the experimental standards

It is expected that each Action Service Provider will provide:

• a technical analyst or architect to engage part-time during the Standards Development, Build and Review phases
• one or two developers during the Build phase
• a test infrastructure environment to host the experimental build that is accessible from the internet

Measurement

To be able to verify the hypotheses defined in this experiment the following measurements and assessments will be made during the experiment:

• An estimation by each participant of the cost to implement the resulting experiment solution as a production capability.
• A Consumer Experience review of the resulting solution to test the acceptability of the solution for customers would be undertaken.
• Perspectives of the viability of the approach and solution would be obtained from the participant implementation teams to objectively assess the viability of the approach.

Prioritisation

The DSB has received feedback from banking sector participants to explore the Action Initiation problem space to better understand the opportunities and considerations. There was strong support for exploring mortgage origination especially in the current economic environment with the cost of living pressures. Having efficient ways to originate home loans via the CDR could facilitate choice, competition and switching.

The DSB has not run an experiment of this nature with CDR participants before, so it is proposed this proposition is prioritised to develop a template of experimentation with industry in a collaborative way.

[markverstege]

The first meeting for this experiment was held on 10th Oct 2023 and the experiment concluded on 2nd May 2024. This experiment has now concluded and is in the final stages of report drafting.

A Noting Paper has been created: https://github.com/ConsumerDataStandardsAustralia/standards/issues/348 in relation to this experiment. This is a placeholder where the report of findings will be published.