What is Open Banking?
In its simplest form; Open Banking is the infrastructure that allows consumers to share their data with regulated third parties when the customer chooses to do so.
The principle idea behind Open Banking is that by sharing their transactional data consumers will get access to better deals, fairer products and appropriate finance options as providers will be able to use the data to make better and faster decisions.
Why use Open Banking?
By choosing to opt into Open Banking both the member and the Credit Union will benefit from:
a faster and more accurate loan application process
lower costs due to time saved reviewing transactions
fewer problem accounts due to more accurate affordability assessments
Open Banking gives lenders a concise viewpoint on a consumer's financial well-being by giving a real-time picture of the consumer's financial situation as problems can be easily spotted.
Credit bureau data used in isolation can increase exclusion as decisions are made based on past problems that have long been and gone.
Open Banking data, combined with Credit Bureau data, can result in better outcomes for consumers and lenders, but particularly the financially excluded.
Changing Customer Behaviour
Open Banking presents us with a challenge:
We’ve been told, ad nauseam, not to share our personal information, especially our banking information, for decades – now we're are being encouraged to do the complete opposite.
If your members are to make the transition from guarding their banking data, with their very lives, to openly sharing that data with you; it is critical they understand the implications, benefits and safeguards.
It is clear then that you will play the most important role in shaping how your members' view Open Banking and how likely they are to participate.
The first time someone encounters an Open Banking proposition, they experience a variety of motivational forces. Some of these forces encourage them to share their data, others induce anxiety and resistance.
Below we have put together some summaries that are specific to the relationship between you and your members, that we believe will help you reduce members' anxieties and resistance to Open Banking. Thereby helping you get the results you need. These summaries are ideal for sharing via a page on your website, blog or news posts and during the application process.
You can also download these summaries here
What is Open Banking?
Open banking is a way for you to give us secure and limited access to your bank transaction data. Essentially it is a digital bank statement that we will use to help assess your loan application.
Open Banking data allows us to process loan applications and assess affordability much faster! Making an application that could have taken days to process to take hours, or in some cases, just minutes.
Is open banking safe?
Open banking is one of the safest ways to share your financial data.
As a consumer, you control:
what information is shared
who you allow to access your information
for how long they will have that access
You never have to give your password or login details to any organisation.
Open banking providers in the UK:
are fully regulated by the FCA
can only access your account if you have given your explicit consent
must only access the data specifically consented to
do not store your banking credentials, making open banking inherently more secure than credit or debit card payments.
How does open banking work?
During your application we'll ask you to 'authorise online access' to your Open Banking data.
After selecting to authorise online access you will be taken to our Open Banking portal, where you will be told what information you will be sharing with us, how this is done and who helps us do this.
At any time you will be able to cancel this process and withdraw consent.
After you click to allow you'll be able to select your banking provider and connect your data. Your bank will ask you to log into your account and to select which accounts you wish to share with us.
We kindly ask that you connect each bank accounts you have with each provider.
For example if you have a current account with NatWest, and a current account and savings account with Halifax, we ask that you connect all three account by logging into each provider and selecting each account.
Again, at any time you can cancel this process or withdraw your consent. This is a fully secure process and you are in control at all times.
Why you should use Open Banking
The 4 main reasons are:
it's fast
it's easy
it's secure
it's better for the environment
Open Banking data allows us to make faster, more accurate and fairer decisions on your loan application.
Were we to use paper statements the loan application process can take significantly longer, even if you were able to bring bank statements into the branch on the same day of application, the process can take days.
Open Banking allows us to process loan applications much faster, in some cases just minutes.
How NestEgg uses Open Banking data
Our Open Banking Partner TrueLayer provides access to the transactional information held about an account holder. This is a list of transactions over a set period. It is the raw electronic equivalent of a bank or credit card statement.
We then categorise, classify and present this data to you in the Spend Financial Health Indicator
This allows you to quickly verify income and key expenditure items but also allows us to alert you to potential expenditure issues.