Open banking unlocked: How to innovate and thrive with open banking

The research focused on the deployment of open banking, including what’s working and what’s still a challenge. The first phase of the study was in Q2 2020, just as the entire industry was transforming its operations in the midst of Covid-19 and calculating how to offer payment deferrals to millions of people. The second was in Q4 2020, just as it became clearer the pandemic was entering a second wave; precipitating an extended period of forbearance for consumers and heightened activity among lenders to ascertain an accurate picture of customers’ financial circumstances.

The detailed results are published in this report. They depict the business functions and lending products where open banking was deployed most frequently, and at the largest scale, during those periods in which the surveys were undertaken.

Summary of key findings

The report has found that:

• Over half of organisations surveyed (57%) have deployed open banking services in the last year.
• Covid-19 has accelerated lender engagement with open banking. 47% said they saw benefit on using open banking to verify income and employment status.
• The quality of data shared provides useful additional insight on customer’s financial well-being including income shock, alerts on changes to spend behaviour, and financial stress.
• Many lenders see the benefits of using bureau and open banking data. It’s not a choice between one or the other.
• Collections is also an area of focus with 67% using it to understand financial stress and consumer vulnerabilities in onboarding or delinquency and 28% of lenders using it to personalise collection strategies.
• It gives the lender an ability to provide ‘rate for risk’, depending on the customer’s circumstances and has reduced fraud cases and losses.
• There’s more reliable information for verification of income; and a better, more comprehensive understanding of income and expenditure.

Having gone through a period of ‘test and learn’ over the last 18 months, lenders are starting to operationalise open banking. Automated categorisation of bank transaction data is being operationalised, reducing time to interpret bank statements, providing better insight on customer’s affordability and improving the speed of decision making.

Experian is leading the market with operational use cases and engagement with nearly a million UK consumers. We’re also the only prominent consumer brand actively promoting the benefits of open banking to consumers. Our deployments include account aggregation, affordability across a whole variety of credit lines, advanced eligibility, collections and debt advice, personal money management (Scoreboost), automated categorisation of bank and credit card transaction data and SME affordability.

Read the full report

The report contains practical examples of what organisations that have embraced open banking are doing. No matter the size and shape of your lending business or customer profile, it can provide useful, practical insight at all stages of the open banking journey.

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