Open banking for consumers
David Fagleman, Advocacy Associate, Finance Innovation Lab
Q.
What role can open banking products and services play in supporting financially vulnerable consumers in managing their finances?
“Mainstream financial services often fail people, especially those in vulnerable circumstances. The cost of living crisis is a stark reminder that, for many people, struggling to make ends meet is the norm. According to the FCA, even before inflation rose to 10%, 7.8 million people found it hard to manage their bills, an increase of around 2.5 million since 2020.
Open banking has already brought some new products and services that aim to benefit people in vulnerable circumstances. For example, there are products that empower borrowers to improve their financial health and lenders to offer credit to customers they wouldn’t normally consider.
However, it will take more of these organisations to transform the impact that financial services have in our lives. 2023 should be the year that the industry steps up to the challenge of tackling growing issues such as financial exclusion and dependence on high-interest credit.”
Dr Mike Granleese, Deputy Managing Director, Corporate Reputation, Ipsos
Q.
What role can open banking data and services play in supporting consumers to manage their finances?
“With economic confidence at an extreme low, 2023 could see consumers branch out into pastures new in a search for value. In such an environment, there is a clear opportunity for open banking to accelerate adoption by helping consumers make better spending, saving, and borrowing decisions.
Open banking’s Account Information Services (AIS) capability is tailormade for this challenge and value creation could be the spark that helps overcome current barriers to adoption – awareness, understanding and trust.
The economic downturn can also be the catalyst for services to emerge that target low-income groups. Consumers facing acute financial distress have an even greater need to seek out services that can help optimise their limited resources.
With third sector organisations already engaged in utilising the benefits of open banking, 2023 could optimistically be the year where its application in addressing financial hardship helps widen awareness and adoption beyond the current consideration set.”
Faith Reynolds, Independent Consumer Expert
Q.
What role can open banking products play in supporting consumers to manage their finances?
“Now more than ever, people need help to make their money stretch as far as possible. This coming year might provide impetus for providers to embed income maximisation tools, and use open banking to make sure people are accessing all the support they can. Too many people wait over a year to get debt advice.
Open banking could provide prompts, referrals and new embedded services to help people gain and maintain control over their finances more quickly.
Data is critical to solving these challenges, so the push to open finance and smart data will continue.”
