New consumer research from Europe’s leading open banking platform, Tink, reveals that over a quarter (28%) of the UK’s self-employed struggle to access the financial services they require, leading many to believe the current system works against them due to their employment status.

According to the survey of UK consumers, a stark 27% of self-employed people feel they have been actively discriminated against whilst trying to access financial services. In addition, a third of the self-employed (33%) believe their employment status has been an obstacle to them getting a mortgage, and a further 31% believe it has hampered their ability to obtain credit.

These sentiments are borne out in reality as more than one in six (15%) self-employed people say they have been rejected while trying to secure a mortgage to purchase a home, twice as many as the national average of just 7%. Meanwhile, some self-employed people are even struggling to be accepted for core personal banking services such as current or savings accounts (16% vs 7% national average). 

Financial institutions can do more to enable access to financial services

With sole traders contributing an estimated 303 billion to the UK economy*, these findings lay bare the need for tailored, data-driven financial support for the self-employed. They highlight an opportunity for financial services providers to give control back to consumers by enabling them to use their own real-time data to access a broad range of products and services.

Traditional credit checks combined with onerous, often paper-based processes to provide evidence of expenditure and income levels can be time-consuming, out of date and end in higher abandonment or rejection rates. 

Enabled through open banking technology, financial services providers, with consumer consent, are able to use transaction data in people's bank accounts to take a holistic approach to gather insights on income and spending behaviours to inform creditworthiness and affordability - increasing financial inclusion and access while removing unfair barriers to lending encountered by certain consumer cohorts such as the self-employed. 

Tasha Chouhan, UK & IE Banking Lead at Tink, commented on the findings: “Our research has exposed flaws in the current financial services system, with the widespread feeling among many self-employed consumers that they are being denied access to financial services on the basis of their employment status. As such, there is a distinct gap between the service those who are self-employed require, and the service they are currently receiving, as many revealed they have struggled to secure personal credit, loans or mortgages at a time when they need them most.

“Data-driven technology is changing the lending process, and financial services providers should embrace the use of open banking technology to enable faster and more accurate credit decisions in real-time which work for everyone - including the self-employed. Greater access to financial data allows lenders to make better decisions about affordability and creditworthiness, based on up-to-date income and spending information, rather than credit scores or antiquated risk decisioning.”