This initiative comes at an essential time, with RBA (Reserve Bank of Australia) rate hikes affecting the Australian lending market capabilities. The now live integration will enable financial service providers and fintechs to have transactions available from over 20 Australian banks, alongside more than 30 accounting, ecommerce, and payments data sources accessible via Codat’s API.
The data needed by providers when it comes to underwriting will be unlocked in a single integration, without having to ask clients to share sensitive financial data via email. Through Codat’s Assess product, lenders are enabled to cross-reference bank transactions with accounting data in an automatic manner, to validate accuracy. When it comes to SMBs, this means lowering the administrative burden associated with financial services applications, such as business loans, and allowing them to provide the required information in a matter of a few clicks.
Codat chose Basiq as its partner due to the ‘Basiq 3.0 Platform’ unique capabilities, which extend past the Consumer Data Right’s (CDR) Open Banking system, with the platform allowing access to financial data across several institutions, including those available through Open Banking, and those that are not part of the system yet. Through a combination of this data and Codat’s Assess product, Codat’s Australian customers will be enabled to carry out the underwriting process in a more confident manner.
Recently, the CDR initiative has been scrutinised by the fintech community, with some having invested over USD 1 million in Open Banking Accredited Data Recipient (ADR) connectivity and saying that despite its potential, it is not yet fit for purpose. The initiative has been labelled as ‘disappointing’ and ‘useless’ by underwhelmed startups when it comes to business data sharing, as consent is needed from all responsible business holders, meaning that no account data is flowing.
Basiq representatives have stated that the partnership will enable financial data access via the Basiq 3.0 platform in an Open Finance world where a business’s financial data can sit in several systems, continuing to say that their platform provides the flexibility needed to access said data bought through web capture and once matured, CDR Open Banking. The companies are looking to help provide together an improved underwriting which has at its basis a complete view of a customer’s financial situation.
Codat officials have stated that businesses are starting to recognise the benefits of digital data aggregation over risky, legacy emailed bank statements and spreadsheets, with an increased number of SMEs and startups looking for a plug-and-play data solution, and more established players moving towards financial transformation initiatives. The partnership marks the first Australia-based investment made by the company following a USD 137 million Series C funding, part of which is to be allocated for driving growth in the area, where businesses are looking to leverage Open Finance’s benefits, but do not have the necessary infrastructure for doing so.
In addition to the partnership, both Codat and Basiq have announced strategic investments from fintech solutions provider Plaid, which has more than 12,000 connections to banks globally and has previously shown interest in helping bridge financial data gaps between North America and Australia.
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