More than 4 out of 10 UK Consumers Would use Open Banking to Unlock Faster Loan Approvals and Better Rates from their Banks
- 14.09.2021 10:45 am
- New research from digital bank Zopa finds that a large swathe of UK consumers would use Open Banking to get better, easier, or faster access to credit despite its low awareness
- The introduction of Open Banking to previously untapped verticals such as access to credit could spearhead wider adoption amongst UK consumers and reach 40 million active users by 2025
- Zopa’s Open Banking partnership with ClearScore resulted in a 37% increase in the number of users eligible to apply for a Zopa credit card
- The findings of Zopa’s Open Banking Report highlight the enormous and untapped potential of Open Banking to provide improved access to credit during and post the Covid-19 pandemic
As new lending begins to overtake the repayment boom seen during the pandemic, new research from digital bank Zopa finds that over 40% of UK consumers would make use of Open Banking to apply for credit if it improved their chances of getting an offer, gave them access to better rates, or made the application faster and hassle free.
Despite that, 8 out of 10 consumers have never knowingly used Open Banking. This disconnect reveals a strong demand for the benefits that Open Banking can bring customers, despite a lack of awareness of its underlying proposition.
The Open Banking ecosystem already benefits nearly 4 million active users and is growing due to stable APIs, new consumer facing applications, and the UK’s forward-looking regulation.
So far adoption has mainly been driven by use of account aggregation services – by far the simplest and most popular use of Open Banking today. Aggregation has a positive impact on customers, with 50% stating that viewing all their banking products in one place makes them feel more secure.
Research shows that UK consumers currently use Open Banking to:
- To view all bank accounts in one place – 34%
- To keep an eye on all savings and investments – 28%
- To move money between bank accounts and savings – 27%
However, Zopa’s latest research finds that the introduction of Open Banking to previously untapped customer needs, like access to credit, could rapidly accelerate this adoption, benefitting up to 40 million active users by 2025*.
The research shows that UK consumers would use Open Banking to apply for credit if it helped them:
- Simplify the application, making the application faster and hassle free - 44%
- Unlock better rates, accessing better rates on financial products - 43%
- Secure an offer, improving their chances of getting an offer from a lender - 40%
Zopa’s report [LINK] on Open Banking suggests that these benefits are often best delivered when fintechs work together to deliver customer value in a simple, easy to use way.
A good example is Zopa’s partnership with ClearScore, which used Open Banking to assess eligibility for Zopa’s credit card. This resulted in a 37% increase in the number of users eligible to apply for a Zopa credit card, improving financial inclusion for thousands of new customers who may have previously been declined due to thin files. Within one week of roll out, more than 43,000 ClearScore users saw a Zopa offer which would not have been available to them based on credit report data alone.
Tim Waterman, Chief Commercial Officer at Zopa, said: “We are pleased to be part of a group of fintechs at the forefront of innovation, bringing the benefits of Open Banking to millions of new customers. We already use Open Banking verification to ease application journeys and to power tools like Borrowing Power which help our customers improve their financial health.”
“By using Open Banking to calculate credit eligibility for the first time, we are helping thousands more customers access our award-winning credit products in a way which they may not have been eligible to previously. We believe this further supports our vision to build the best place for money in the UK”.
Zopa currently serves half a million customers. Since acquiring its full banking licence in June 2020, it has attracted more than £600m in customer deposits for its fixed term savings accounts, issued 130,000 of its British Bank Award-winning credit cards, and became a top 10 credit card issuer. It is currently approving 15,000 new credit cards every month.