Ahead of the two-year anniversary of its implementation on 13 January 2020, Robert McKechnie, Open Banking Expert at Equifax UK, believes broadening Open Banking platforms will be a turning point in its drive to mass adoption in the year ahead:
“Open Banking, which was brought into inception two years ago, was predicted by many to spark a revolution in consumer finance. However, its full potential remains largely untapped. Open Banking platforms have the capacity to address unmet needs of SMEs, provide better outcomes for those in problem debt, and be at the forefront of the fight against financial fraud in 2020.
“Two of the main pain points for start-ups and would-be entrepreneurs are access to credit and inflexible payment plans. Open Banking solutions now exist that can overcome these obstacles, supporting businesses with thin files by, for example, drawing upon personal finance history. Further development of such platforms will help align the needs of the vital SME sector with providers of finance, and allow firms to amplify their understanding of spending patterns and periodic stress-points.
“Leveraging the extra level of financial data provided, Open Banking solutions can mitigate the risk of financial fraud, fully digitise and streamline the credit application, consent and verification processes within the mortgage, insurance, automotive and utilities spaces to name but a few.
“Open Banking platforms can also help providers assist and recognise consumers who are showing unusual spending patterns. For example, early intervention is possible when an existing customer exhibits signs of financial stress, such as regular use of an agreed overdraft facility or their bank account going into excess territory, which leads to better debt outcomes for financially vulnerable consumers.
“While the impact of Open Banking hasn’t been as immediate or as seismic as initially predicted, it has irrevocably shifted the banking and wider financial services landscape for the better, and must continue to develop and broaden in 2020.”