Over half (55 per cent) of UK credit providers plan to implement open banking in 2021, Equifax has found.
The credit reference agency’s latest Open Banking Research Report has revealed that 93 per cent of those businesses expect to adopt the data-sharing initiative in the next 12 months. This will build on the four million UK consumers and small businesses that are already active users of open banking-enabled products.
Nearly a fifth (19 per cent) of lenders plan to fast-track their implementation of open banking-enabled products because of Covid-19.
Equifax said that the pandemic has accelerated consumer adoption of new technologies and with many branches of banks closed during the first lockdown, mandatory aspects of the credit lending process, such as ID verification and payment tools, were forced online. This required new forms of verification, powered by open banking.
The report found the majority of consumers who have used open banking enabled products (80 per cent) are willing to recommend them to friends and family.
According to research participants, the top ranked benefit of open banking is improved decision-making on credit risk as a result of data insight, followed by faster decision-making and removing manual processes.
More detailed data for a better understanding of Covid-19 impact and improving access to thin file credit customers also made it into the top five.
“Open banking data analytics allows credit lenders to build a 360 perspective of a consumer’s financial life, leading to more rigorous financial checks and therefore a fairer, more affordable journey for both lenders and consumers,” said Emma Steeley, chief executive at AccountScore, an Equifax company.
“Our research shows 47 per cent of people worry every day about their finances, yet customer confidence can be built in the long-term with the knowledge that data is adding an extra layer of protection throughout.
“Access to fast, accurate and up-to-date transactional data, via open banking, has enabled credit providers to understand the potential circumstances of their customers throughout the pandemic, and responsibly lend as a result.
“Equifax has experienced more than a 300 per cent increase in open banking adoption over the past 18 months, with providers who do not adapt at risk of lagging behind and overlooking the curve of digital innovation. Open banking is undoubtedly a crucial part of the credit industry’s future.”