Mortgages

Buying a home can be time-consuming, costly and stressful, but open banking is already helping to make this process quicker, cheaper, and more accessible.

To start with, a growing number of banks and mortgage brokers use open banking connections to validate a borrower’s income, eliminating the need to provide several years of bank statements. The process can now take minutes instead of days.

And one leading UK building society recently announced it would incorporate open banking-driven affordability checks into its mortgage assessments. For first-time buyers, linking their current account payments to their credit score, and providing additional evidence of a good financial track record — such as regular council tax payments — can be factored into mortgage approvals.

There is also a savings app for first-time buyers, which lets buyers open a Lifetime ISA, build their deposit with government incentives, and allow family and friends to contribute to the fund for their first home.

Beyond this, open finance has the potential to provide consumers with an overview of suitable mortgage products across the entire market based on their precise needs, by sharing their income data with online or traditional brokers to help them find suitable products that reflect their personal circumstances.

In Australia, one bank has taken this a step further, using the technology to incorporate property valuations into the mortgage application process, offering 10-minute home loans. This innovative use could soon be replicated in the UK market.

Property rentals

Open banking is also helping the UK’s renters. For example, one rental platform uses the technology to access up-to-date income data direct from tenants’ bank accounts, quickly categorising incoming transactions, and simplifying the application process for tenants, and landlords. It also helps to detect fraud and reduce the risk of rent arrears.

The technology is also making it easier for people to include rental payments in their credit report, helping them strengthen their credit history and improving their chances of accessing affordable credit. This is much needed for people with a 'thin’ credit file and more financially vulnerable consumers.

And one lettings platform has already incorporated VRPs for non-sweeping technology into its payment collections process, offering a faster, more flexible and lower cost alternative to Direct Debit and debit cards.

Expect to see fully-integrated rental platforms offering credit checking and landlord referencing alongside open finance-enabled ways to pay.

Subscriptions

Many households are looking to cut their regular expenditure, including reviewing their monthly subscriptions to gyms or entertainment services, but cancelling subscriptions isn’t always easy.

While open banking money management apps already help identify duplicate or unused subscriptions, the use of non-sweeping VRPs by subscription services will also allow customers more control over this common repeat expenditure.

Consumers will be able to clearly see what they are committing to and when, so they can avoid falling into the ‘subscription trap’ – where they have signed up for a free or cut-price trial and are automatically switched to a costly subscription payment plan if they don’t cancel in time.