Bluestone Mortgages has launched the pilot phase of an open banking service offered as part of its underwriting process.
The service will be supported by credit reference agency Experian and will offer customers the option to provide bank transaction data to Bluestone within minutes, expected to "significantly" reduce mortgage processing times.
The pilot phase will be available to a select group of advisers on the lender’s panel, with a national launch expected in the near future.
Open banking means customers and small and medium-sized businesses can share their current account information securely with other third-party providers.
The rules were introduced in January 2018, after the Competition and Markets Authority (CMA) found larger banks did not have to compete hard enough for customers’ business, and smaller and newer banks found it difficult to grow and access the market.
A Bluestone spokesperson said the lender had used applicant bank statements for many years to verify application information, but the provision of statements could be "cumbersome" for customer and lender.
The spokesperson said open banking provided a contemporary, digital alternative which was likely to "radically reduce" decision times and improve customer outcomes.
Peter McGuinness, chief executive at Bluestone, said it was the first specialist lender to deploy an open banking service into the core mortgage approval process.
He said: "We believe innovation that will be made possible with open banking is going to change the landscape for specialist lending, particularly in areas of affordability assessment and expenditure patterns, whilst at the same removing a lot of friction associated with a traditional mortgage application process."
Mr McGuinness added: "We see open banking as compelling; it will provide our customers and their advisers with a significantly more efficient credit application process and give Bluestone access to high quality and timely information from which to support a mortgage approval."
Tom Blacksell, managing director of B2B at Experian, said a customer’s credit position only ever told "part of the story" in the mortgage process.
He said: "People’s financial circumstances are multidimensional and unique and we are supporting our customers as they look to keep up with a diverse and ever-changing global population.
"Open banking has the power to help people who have found it difficult to prove they can afford a mortgage, perhaps because they are self-employed or a contractor."
Mr Blacksell said Experian’s service automatically categorised consented bank account data, so lenders could assess how much customers had coming in and going out each month in a matter of seconds.
He said: "Putting this information at the fingertips of Bluestone helps them to make more informed lending decisions in a much shorter time frame.
"It’s a great example of how the insight from open banking can increase financial inclusion and help people to access more affordable services."