Over the past couple of years ‘Open Banking’ has entered the lexicon of financial services, even if we may still be at a point where many consumers are not certain what it means for them and how it might pave the way for a more seamless product journey.
Indeed, in some intermediary quarters there might also be a lack of understanding about how Open Banking might open up client finances, how it could speed up the process journey and what it might mean when dealing with lenders and securing the necessary offers.
We recently launched our Credit Assess product which provides advisers not just with the client’s credit report but also, via Open Banking, a full bank report providing total transparency about a client’s finances and how they score, credit-wise.
With that applicant consent, the adviser can – via Credit Assess – digitally and securely access their bank account enabling three months’ worth of transactions to be pulled back to them in a quick and convenient way. It also has the added benefit of being able to analyse and categories the transactions, so the adviser doesn’t have to manually travel through a client’s statement.
It’s been interesting for me to talk to a large number of advisers over recent weeks and, while there tends to be plenty of knowledge about credit reports/scores, some are not so sure of the value of securing that bank account data/report via Open Banking.
Part of the benefit of course is that this banking information is not manually generated and therefore it can’t be edited, or indeed tampered with. While we might all like to believe that our clients would not provide doctored bank statements and that we could rely on those paper or pdf documents when it comes to analysing the incomings and outgoings, we can’t truly be sure that all is what it seems.
Having the Open Banking-generated banking report, plus the bank statements at the back end, allows the adviser to be totally confident that the transactions are verified information, and also having those statements allows both to be checked against each other.
Plus having the ability drop in the unedited banking information into an advisory CMS delivers clear picture to the adviser, and one that can be passed on to the lender. They will then be able to give an initial answer about the client’s application, which if need be, can then be backed up with the actual statements.
I’ve talked to advisers – particularly during the current lockdown situation – who have cases which are currently not getting through lenders’ heightened affordability measures but having the full banking information means they can potentially come back post-lockdown and try again. At that point, they’ll be able to back this Open Banking data up with a picture of the client’s finances pre- and post-lockdown and should be able to secure offers as lenders move from a less stringent position.
In this position, advisers are effectively pre-verifying their client’s financial position and utilising a product like Credit Assess to have the fullest picture possible to move forward when the market allows.
The interesting part of Open Banking of course is that it must be sanctioned by the consumer – figures in January suggested that the UK had passed the one-million customer mark in terms of Open Banking use, but I suspect that in a post-virus, more technologically-savvy world, consumers are going to be much more open to allowing this type of access to their finances, especially if they can see the speed of use and the benefits it will bring.
Indeed, we’ve already been moving in this direction in recent years but one suspects that many millions of new or existing borrowers, who may have been put off by some security concerns, will now be able to see the strength of this system and what it might mean to their advisers and their cases. If it’s going to support an adviser and potentially get an affirmative answer in double-quick time, then the use of Open Banking is only going to grow.
Advisers who explain this to clients can benefit from it right away. The future, in many ways, is already here and it seems obvious that the fear factor will have dissipated even more during recent months, and that both clients and their advisers will therefore be feeling the benefits for many years to come.
David Jones is director of Click2Check