As of 13th January, Open Banking is being rolled out across the UK’s nine major banking institutions. It put the customer back in control of their personal data, increasing the choice of financial solutions available to them. Customers will have the choice to allow their banks to securely share data including earnings, spending, debts and credit cards, with other banks and financial institutions.
Customers who have opted in, will benefit from a more effective and efficient way of applying for finance of all types. Power transfers to the consumer as financial institutions must now compete for their business.
Mortgage applications and open banking consumers
Mortgage applications in particular are one area where customers will really see the benefits of Open Banking. In essence, brokers and providers will have direct access to applicants’ spending history. This will make the process quicker and could remove the stress of searching for previous bank statements and pay slips.
At Aro, we welcome this landmark change, which places the power firmly back in the hands of the consumer. Through our market-leading technology platform it has always been our mission to help customers understand the range of funding options available to them. Moreover, to ensure they can make a wise choice about their finance solution.
In the future, we predict that, due to Open Banking, customers will further benefit from the growing competition between financial providers, as banks realise they will need to offer more than just financial services to their customers to encourage them to stay. As a result, we expect the quality of financial services to improve and it is likely that fees will decrease as major banks look to match new offerings from smaller challenger banks, which are likely to populate the market place.
Why it will work
We are also likely to see an increase in money management Apps – many banks are already looking at developing these – which will allow customers to make informed lifestyle options and provide greater access to financial support and advice. All of which can only be a good thing for consumers.