Noticed us using the term ‘Open Banking’ quite a lot lately? Well, that’s because we use this technology as part of their lending process. To help you get a bit more familiar with this technology and its benefits, here’s a quick run though of what Open Banking is and how it works.
What is Open Banking?
Open Banking is a safe and secure way for you to grant finance providers with read-only access your financial information. Just like us, it’s regulated by the Financial Conduct Authority (FCA) and is held to the same high standards.
The technology was initially set up by the Competition and Markets Authority on behalf of the UK government to boost competition in the financial services sector. Designed to make it easier for customers to access their transaction data, compare accounts and access new products, Open Banking can help users find better deals and make more of their money.
How does Open Banking work?
Open Banking allows you to give consent to regulated third party providers to securely access your bank transaction history or make payments. Every provider that uses Open Banking to offer products and services must be regulated by the FCA or European equivalent.
So, you’re probably wondering, how do you access the information needed from my bank account? Well, with Open Banking, you stay in control. You choose which providers you want to connect to your data. You’ll also never be asked to share your password or login details with anyone other than your own bank and building society.
After you grant access to a third-party provider, they’ll be able to see your bank transaction history. You can remove their access at any time.
How would using Open Banking benefit me?
In the world of credit, one of the ways you can take advantage of using Open Banking is to use it to potentially improve your eligibility for finance and receive more accurate loan options.
For instance, if you don’t think your credit score is a good representation of how you manage your money, you can use Open Banking to show lenders read-only access to your bank transaction data. By doing this, you can prove to lenders that you receive an income, regularly pay your rent, put money into your savings, and more – all things a lender can’t see from looking at your credit history alone.
So, for example, if you’re new to the world of credit or new to the UK, you may even be able to use Open Banking to unlock borrowing possibilities that were previously out of reach, or filter out options that would have led to a decline at a later stage.
Want to see if you’re eligible for a loan with our Open Banking lenders? Check your eligibility now without harming your credit score.
Want to know more about Open Banking? We have answers to loans of commonly asked questions in our FAQs.