The financial environment has altered significantly in the UK since the pandemic, putting serious pressure on the asset finance landscape. However, the financial environment has been impacting interactions with customers since before the pandemic as well. Over the last two years, regulators in the European Union have passed laws to digitise banking and ensure better data security. As the market and customer behavior continually changes, lenders will need to come up with a concrete plan to reposition themselves for the future. Current financial conditions have accelerated the need for instant credit products, pushing lenders to adopt open banking APIs. Open banking presents a unique solution for lenders. Open banking improves your business by providing quick, reliable credit assessments while gaining transparency and integrity from regulators and customers.
1. Open banking mitigates risks with outdated credit information
Credit bureaus and credit reference agencies have announced proactive measures to help borrowers by freezing their credit scores. Lenders need instant solutions in getting their borrowers’ credit history. Especially in today’s financial environment, people’s financial circumstances could change drastically even in a few days. However, traditional credit bureau data usually lags a few months or half a year behind. Open banking gives lenders a real-time, accurate, and detailed view of borrowers’ finances. Moreover, lenders no longer need to ask for three months of printed bank statements. Lenders now can get direct digital versions that they can use models to assess serviceability and verify incomes. Lenders will also get access to borrowers’ accounts from any financial institution across the EU in real-time. This connection between the lender and borrower is done automatically, allowing lenders to get the most up-to-date information from borrowers’ records.
2. Build an entirely open digital platform
With the latest technologies and the revised Payment Services Directive 2 (PSD2), lenders can now streamline the entire lending process. Furthermore, lenders can now consolidate customer data from multiple sources while maintaining the EU’s General Data Protection Regulation. In addition, with these insights, lenders can instantly generate real-time insights to provide instant credit decisioning. Lenders and borrowers no longer have to go the traditional route and use time-consuming processes. They no longer have to meet in person, provide bank statements, show proof of salary, etc. By digitising the lending process, lenders now have a 360-degree view of the customer’s financial background within minutes. An open digitised lending platform provides speed, precision, and flexibility to quickly improve decision making and unlock new customer offerings.
3. Real-time pulse on borrowers’ financial health
With open banking, lenders will be in a unique position to track the borrower’s financial situation throughout the life of the loan. By using analytics and instant data sharing, this gives lenders an accurate and reliable picture of the borrower’s financial health. Open banking is very beneficial for borrowers as well. It gives borrowers greater control over their finances and more choices over their loan options. Moreover, open banking helps ensure borrowers’ financial stability by ensuring lenders have the most up-to-date credit information. Open banking provides a seamless shift from traditional banking by enabling lenders to expand credit access to creditworthy borrowers.
The changing face with open banking
LTi’s new strategic partnership with LendingMetrics offers our UK clients access to LendingMetrics’ Open Bank Vision (OBV) technology via API. OBV provides fully categorised bank statement data in real-time based on decades of combined experience in the field. It allows lenders to build an incredibly clear picture of a customer’s affordability including what they earn and spend, as they earn and spend it, as well as spot any troublesome habits such as repeated use of HCSTC. Adopting open banking as a more trusted gateway results in more positive relationships with customers. They must give consent for access to be granted, thus resulting in increased trust and maintained customer loyalty. What’s more, LendingMetrics’ ISO certifications and FCA permissions ensure OBV is secure. This aides in maintaining a customer’s trust that the data they have consented to be shared is in safe hands.
About LTi Technology Solutions
LTi has operated in North America and the UK for nearly 30 years and has a local market presence across the UK. We have an unparalleled client base and leadership across the spectrum of leading lease and loan finance solutions. We pride ourselves as a market leader, offering finance solutions to banks, independents, and captives. Contact us today to learn more on how ASPIRE in the LTiCloud can streamline your business!