Banks lose if the British join the open finance craze under lockdown

Brits dissatisfied with traditional banking services are increasingly lured into the world of open finance.

During the pandemic, challenger banks and fintechs tripled their share of the credit card market and increased their personal loan books by 50 percent, according to new data from ClearScore. The research found that 9.3 million UK adults would use open finance to access better credit, improved offers and interest rates, with 3.2 million people underserved by their current credit options and 3.6 million people ineligible Have credit products.

“The credit market has changed forever in the pandemic,” said Andy Sleigh, Credit Score‘s chief operating officer.

“Fintechs and challengers have been more likely to embrace open finance than their larger competitors because it allows them to expand their lending, better manage risk and lower their overheads,” he continued.

Sleigh said established financial institutions focused on serving their existing customer base during the pandemic, while fintechs and challengers were able to be more agile and experiment with new technologies.

“We’re not seeing this trend wear off,” Sleigh said. “In fact, our own analysis points to increasing consumer acceptance of open finance, which in turn could help challengers take further market share from high street banks.”

However, there are still many ways for banks to make money. Open banking could be key to the recovery of the credit market, which is still 30 percent below pre-pandemic levels. ClearScore data showed that consumers who choose to share their data are typically less at risk than others within the same credit score bands, suggesting that lenders can afford to stop using open finance Test data with low risk.

Sleigh concluded, “The size of the open financial market is enormous, and it gives lenders the opportunity to develop innovative products that benefit customers. These customers are committed, know the benefits and are ready to look around. “