Open Banking in a pandemic With the impact of the COVID-19 crisis on personal finances appearing evermore severe, we look at how Open Banking may be able to help
The impact of the COVID-19 pandem- ic on the personal finances of people across the world has been unsurpris- ingly dire, and this is no different in the UK. More than 4 million people have requested emergency payment freezes, such as mortgage ‘holidays’, and 9 million workers have been asked to go on temporary leave. Data sharing via Open Banking has become essen- tial in giving potential lenders accu- rate, up-to-date information about a customers’ circumstances, enabling them to better assist the financially vulnerable. The UK was already considered to be leading the way in Open Banking, after the Open Banking Standard was imple- mented in January 2018. Since the country-wide lockdown was implement- ed in March, existing trends towards electronic payments - such as con- tactless payments - have accelerated, and the regulations that govern these transactions have been brought into the spotlight as a result. Maha El Dimachki,
head of payments for the FCA, believes it is unlikely that this acceleration will diminish as we return to normality or that we will return to pre-COVID-19 payment methods. ‘It is also a situa- tion that has seen the importance of a strong, resilient payments infrastruc- ture and landscape working well for the economy in a seamless way’, said El Dimachki. Open Banking requires financial insti - tutions to share anonymised user data with approved third-parties in order to promote healthy competition and improve the customer experience. This has allowed lenders to help consumers and businesses during the crisis, for example with facilitating evidencing revenues for self-employed people. Head of Product at Equifax UK, Robert McKechnie, said that the next few months will see many suffering from income shocks and falling into arrears. ‘During this period, Open Banking, and its use of up-to-date bank transaction
data, will be integral in giving lenders an extremely accurate and detailed picture of a consumer’s finances’, he said. By gaining access to accurate data, service providers can make better lending decisions, particularly regarding affordability, and can identify financial - ly vulnerable people in order to provide assistance where most needed. LendingMetrics’ own Open Banking product OpenBankVision (OBV) pro- vides this data in real-time, allowing lenders to build an incredibly clear picture of a customer’s affordability with fully categorised bank statement data. See what a customer earns and spends, as they earn and spend it, as well as spot any troublesome habits such as repeated use of HCSTC. With the question of affordability continually in the spotlight, having access to accu- rate, up-to-date information is more important now than ever. To find out how OBV can benefit you or your business, contact us today.
14 | Metrics Monthly
August 2020 | AU Edition
Made with FlippingBook - professional solution for displaying marketing and sales documents online