Financial inclusion
How can open banking – and smart data – expand access to affordable lending, particularly for people who lack a traditional credit profile?
James Pursaill
CEO and Co-Founder, Plend
2025 promises to be an exciting year for open banking. We welcome the pressure from the FCA, driven by improved Consumer Duty standards, to challenge banks and lenders which are not using open banking to consider whether they are truly delivering the best outcomes for their customers. We expect 2025 to be the year this pressure transforms well-intentioned words into firm action.
In 2025, price comparison websites, which drive much of consumer lending in the UK, are set to scale up by incorporating open banking into their user journeys. This presents lenders with a unique opportunity to reach more customers with invisible, thin, or impacted credit profiles and offer them substantial loans at fair prices — where traditional banks, relying solely on bureau data, might have turned them down.
In short, we expect 2025 to be the year open banking becomes an essential part of the lending process, rather than just a 'nice-to have'. When used correctly, it has the potential to lower the cost of credit and increase the size and length of loans that millions of customers in the UK have previously been denied access to.
Tom Markham
UK General Manager, ClearScore
Open banking can be especially useful where customers have thin credit files, lower credit scores or irregular income. Credit scores can be an inaccurate reflection of a customer’s financial situation and may over- or under-state a customer’s creditworthiness. This issue was recognised explicitly by the FCA in its Credit Information Market Study – and the regulator is now taking steps to remedy it.
We provide transaction data via open banking to an increasing number of lenders via D•One, our open banking services business built for the credit market. According to one of our lender partners, one in four of the customers they decline are gambling excessively, despite having good credit scores. They also experience 70% fewer defaults than would have been expected based on the credit score alone, due to the ability to make better decisions using open banking data.
We are seeing significant momentum and investment from lenders in this area. Over the last 18 months, the proportion of loans taken out in our marketplace that wouldn’t have been offered without open banking has grown by five times.
How can open banking – and smart data – speed up the delivery of debt advice to people in the UK and support financial resilience?
Jo Toolan
Chair, Managing Director - Payments, PayPoint
Open banking has long been used to improve processes and financial data to have a positive impact on people’s lives, whether helping them get a mortgage to buy a new home or lending them money to get their first car. However, it’s estimated that over 8 million people in the UK every year need debt advice to help them deal with tough financial situations, and that has grown considerably over the past few years through the cost-of-living crisis.
At PayPoint, we believe there is huge potential to revolutionise how debt advice is delivered, harnessing the power of open banking. Our work with the Citizens Advice Bureau, using our FIS Customer Support Tool, has dramatically changed how they support clients – advisors are now able to get an up-to-date, accurate and holistic view of someone’s finances in minutes, when it used to take weeks or even months. That means they can provide counsel faster, reducing the risk of debts becoming even greater or more serious throughout the consultation process.
We believe we are just scratching the surface of how open banking and smart data can have a tangible, positive impact on people’s live, right when they need it most.
