“Open Banking Will Have Positive Impact on Customer Choice,” explains Financial Expert

Open Banking is becoming increasingly popular as a financial management option. But what exactly is it? Financial expert David Beard, from financial services Lending Expert, describes Open Banking and why it is becoming the preferred option for many. 

“Open banking is a safe way for you to allow trusted lenders and providers access to your personal financial data. Information like your income and spending habits can now be shared with lenders which allows them to make more informed and smarter lending decisions when it comes to applying for credit and loans.”

“Back in the ‘old days’ if you wanted a mortgage or a loan then the lender may have asked you to provide copies of bank statements,” Beard continues. “And an underwriter may have had to read through these to assess and verify your bank accounts and spending habits. However this can now all be done digitally and much faster with Open Banking.”

Who is Using Open Banking?

The UK’s 9 largest banks and building societies are already making client data available through Open Banking. These are: Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS Group and Santander. However, Open Banking is becoming more widely used, with many smaller banking and building societies choosing to participate.

Benefits of Open Banking

It is evident from the many banks and building societies choosing to take part in Open Banking that there are many clear benefits.

David Beard at Lending Expert, who specialise in second charge loans, comments on how both customers and lenders can benefit: “Open Banking benefits customers by allowing lenders and financial institutions to offer a much more tailored and individual service based upon your own personal financial data. In turn this should mean lower rates of credit, and better affordability checks. This means customers will only be provided with loans then can afford to repay.”

Potential Dangers of Open Banking

One of the main deterrents of open banking for many is concerns about privacy policy and data protection as it allows access to private financial data from different sources. However, it must be noted that Open Banking is a choice and one which may be opted out of at any time. David Beard explains “you have the ability to stop providing access to your financial data at any time. It is designed to keep you in control at all times, and was created for the benefit of both the customer and provider”.