How consent-driven financial data could improve onboarding, underwriting, and payments.
Financial services are entering an “open data” era.
Across the world, regulators are introducing frameworks that allow consumers to securely share their financial data with trusted third parties. These initiatives, often referred to as open banking or open finance, are designed to increase competition, improve innovation, and give consumers greater control over their data.
New Zealand is moving in the same direction. The Government has introduced a Consumer Data Right (CDR) framework, with banking as the first sector to be designated. While the immediate focus is on banking, the implications extend further. Over time, open data frameworks tend to expand across financial services, creating a new layer of connectivity between institutions, applications, and consumers.
For the life insurance industry, this raises an interesting question: What becomes possible when insurers can access customer financial data with consent, in real time? The answer is not a single new product or feature. Rather, it is a set of incremental improvements across many core insurance processes, from onboarding and underwriting to servicing, claims, and payments.
What “Open Data” actually means
At its core, open data frameworks give consumers the right to share their data with third-party services in a secure, standardised way. Under a Consumer Data Right regime, businesses that hold consumer data must provide mechanisms (typically APIs) that allow authorised third parties to access that data when the customer consents.
The shift is subtle but important. Historically, accessing financial information has often required manual processes: uploading documents, entering details into forms, or emailing statements. Open data replaces many of these interactions with secure, real-time data access.
In New Zealand today, there are already several methods used to connect financial accounts to external services:
- Screen scraping, where a service logs into a bank account on behalf of the user
- Mobile APIs, which use the same interfaces that power banking apps
- Purpose-built APIs, designed specifically for secure third-party access
Purpose-built APIs are generally considered the end state for open data ecosystems, because they allow consumers to grant access without sharing credentials and with clear consent management.
Over time, the Consumer Data Right framework will formalise these types of connections and standardise how data is shared across the financial system.
Why life insurance is particularly interesting
Life insurance has always been a data-intensive business. Insurers collect detailed information about customers during the application process – financial details, employment, income, expenses, liabilities, and more. This information plays a critical role in underwriting and advice.
But once a policy is issued, much of that data quickly becomes static. Customers change jobs, incomes rise and fall, debts are repaid, and financial situations evolve. Yet insurers often only learn about these changes during periodic reviews, if at all.
As a result, much of the information used in underwriting and product design represents a snapshot in time rather than an ongoing view of the customer’s financial position. Open finance has the potential to change this.
With customer consent, insurers could access certain financial signals directly from connected accounts, creating opportunities for more efficient onboarding, better servicing, and improved decision-making.
Open data is already being used in New Zealand
Although regulatory frameworks are still developing, open finance is already present in many parts of the New Zealand market. Consumers regularly connect financial accounts to services that provide clear value. Examples include:
- accounting platforms that automatically import bank transactions
- mortgage brokers who analyse transaction histories during loan applications
- personal finance apps that aggregate financial accounts
- payment services that initiate transactions directly from bank accounts
When the value proposition is strong, consumers are generally comfortable granting this type of access. Adoption of open data services isn’t driven purely by regulation. Instead, it occurs when the service being offered is genuinely easier or more useful for the customer.
Practical opportunities for life insurers
Open data does not radically change the fundamentals of life insurance. However, it can improve a number of processes that are currently manual, slow, or dependent on static information.
Several opportunities stand out.
Faster fact-finding, advice processes, and underwriting
Financial advice processes typically begin with a detailed fact-find. Customers manually provide information such as income, expenses, loans, and assets. This process can be time-consuming and repetitive, particularly when the information already exists in financial accounts.
This friction for customers can delay application completion, or lead to abandonment altogether.
With customer consent, bank transaction data could be used to pre-populate elements of this fact-find. For example:
- income patterns could be inferred from regular salary deposits
- loan repayments could be identified from transaction histories
- expense categories could be estimated from spending data
The goal would not be to replace the advice process, but to accelerate it – allowing advisers and customers to focus on meaningful conversations rather than data entry.
Smarter ongoing customer servicing
One of the biggest challenges in life insurance is that customer information becomes outdated. Insurers often rely on advisers or customers to notify them when circumstances change. In practice, this happens inconsistently.
Connected financial data could introduce a new type of signal into customer servicing. For example, insurers could detect meaningful financial changes such as increases or decreases in income, or significant new debt obligations.
These signals could help trigger conversations about whether cover levels remain appropriate. Used carefully, this type of insight could support a more proactive approach to customer engagement – helping ensure people remain in the right cover as their circumstances evolve.
Simplifying claims
Claims processes often require customers to provide financial evidence. For certain types of claims (particularly income protection) customers may need to demonstrate loss of income or verify financial details. This evidence is typically provided through documents or manual verification.
With connected financial data, some of this evidence could potentially be verified automatically. Transaction data might be used to confirm income patterns, while account details could be used to verify payment destinations.
The result could be simpler claims experiences and faster resolution for customers.
Improving financial underwriting
Financial underwriting frequently requires applicants to provide proof of income and expenses. This evidence is usually collected through documents such as payslips, bank statements, or accountant letters. Gathering and verifying these materials can add friction to the application process.
Connected bank data could provide a more direct way to verify financial information. Transaction histories could be used to assess income patterns, identify liabilities, and understand expense structures.
Used appropriately, this could improve both efficiency and precision in financial underwriting.
Rethinking insurance payments
Payments are another area where open finance may eventually have an impact. Life insurance premiums are typically paid through a mix of direct debit and card payments. Both methods have well-known pain points – declined payments, expired cards, and reconciliation challenges.
Open banking payment initiation allows applications to trigger bank payments directly through APIs, with customer consent. This approach can offer advantages such as:
- lower transaction costs
- real-time payment confirmation
- fewer issues with expired credentials
Imagine being able to check whether funds are available before attempting to take them. Capabilities like this could significantly reduce payment failures and operational friction.
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Open Data and the limits of “switching”
One of the motivations behind open data frameworks is to increase competition by making it easier for consumers to switch providers.
This logic works reasonably well in some parts of financial services. In areas such as banking or general insurance, products are often relatively comparable and switching between providers can be straightforward. If consumers can easily share their data with competing providers, it may reduce friction and encourage more competitive pricing.
Life insurance is structurally different. Policies are typically more complex, and most customers obtain them through an advice process rather than purchasing directly online. More importantly, switching providers usually requires new underwriting, particularly medical underwriting.
This creates a unique risk. If a customer cancels an existing policy before a new policy is fully issued, they may find that their health circumstances have changed in the meantime. A new insurer may apply exclusions, loadings, or even decline cover entirely. In the worst cases, a consumer could unintentionally lose valuable protection that they can no longer replace.
For this reason, advisers and insurers have long treated policy replacement as a process that requires particular care. In New Zealand, replacement advice is already subject to specific regulatory scrutiny.
A challenge for policymakers is that open data frameworks are often developed with sectors like banking or general insurance in mind, where encouraging switching is a straightforward way to increase competition. But life insurance operates under different constraints, and any open data initiatives will need to recognise the role that underwriting and advice play in protecting consumers.
Competition in life insurance is important, but safe outcomes depend on careful underwriting and responsible advice.
The biggest driver of adoption: customer value
Technology alone does not drive adoption of open data services. Consumers connect their financial accounts when there is a clear and immediate benefit.
Accounting platforms such as Xero are a good example. Automatic bank feeds dramatically simplify the reconciliation process, which is why a large proportion of Xero users connect their accounts. Similarly, most mortgage applicants are comfortable sharing transaction data when it helps accelerate their loan application.
The lesson for insurers is simple: Open data capabilities will only gain traction if they meaningfully improve the customer experience.
What insurers should be thinking about now
Open data is unlikely to transform the life insurance industry overnight. However, it introduces a new layer of infrastructure that could gradually reshape how financial information flows between institutions and consumers.
For insurers, the most important steps today are strategic rather than technical. Organisations should be thinking about:
- how customer-consented data might improve core processes
- how will existing systems and architectures support data portability
- where small pilot projects could test new ideas
- how to ensure any use of customer data delivers clear value
As with many technology shifts, the biggest gains are likely to come from experimentation and learning, rather than waiting for a fully mature ecosystem.
Conclusion
Open data represents a significant shift in how financial information can be accessed and used.
For life insurers, the opportunity is not about building entirely new products. Instead, it lies in improving the everyday processes that underpin advice, underwriting, servicing, claims, and payments.
Many of these improvements will be incremental. But over time, they could meaningfully reduce friction across the insurance lifecycle. The insurers that explore these possibilities early will be best positioned to take advantage of the open data era as it unfolds.
About the Author
Tim von Dadelszen is Chief Product Officer at Simfuni. He works with life insurers on modernising operational platforms supporting in-force policy management and payments.
Special thanks to Josh Daniell from Akahu for sharing his expertise and contributing to the ideas set out in this paper.