January 2020 will see the second anniversary of Open Banking in the UK, and the impact of its launch has been significant for both financial institutions and consumers alike. Open Banking has delivered numerous benefits to fintechs specifically by allowing customers to share their account transaction data or initiate payments.
From a global perspective, the Open Banking innovation enables account aggregation, real-time ID verification and allows businesses to save costs by automatically assessing the individual’s affordability. The transparency of sharing consumers’ data enhances fraud detection and evaluation of potential credit risk. Consumers can also expect quicker on-boarding processes as their financial health can sooner be reviewed by the businesses who receive their transactional history.
In the midst of change and transformation driven by the PSD2 legislation in the industry, HubSolv have recently become FCA-approved service providers, which allowed us to implement Open Banking within our systems and revamp our services with a more robust and reliable solution for our users and the individuals they serve.
For The Advisor
Assessing debtors’ affordability has historically been a tedious task that ensured little reporting accuracy. Relying solely on credit ratings is a thing of the past, and with the introduction of Open Banking into the personal insolvency world, debt management firms can now get a clearer and more comprehensive picture of debtors’ financial context, to better assess their income and expenditure. Open Banking also lends insight toward the debtor’s spending habits through categorisation of transactions, allowing the advisor to assess affordability quicker and more accurately than ever before. A more robust understanding of the individual’s financial circumstances can be cultivated by merging credit bureau data with Open Banking data, which bolsters the debtor qualification process.
For The Debtor
Exploring debt management solutions is an inherently stressful process for any individual. Debtors themselves directly benefit from the advances in fintech embracing Open Banking, as access to real-time data yields quicker decision making for the debt advisor.
The implementation of Open Banking benefits debtors in terms of security and enhanced user experience – they can share financial data with more ease, and securely, in full compliance with the Standard Financial Statement. Wait time for the return of debtors’ spending records drops significantly, and a debt management solution can be more quickly put into place.
Debtors can rest assured that the full scope of their financial wellbeing will be relayed in an accurate and timely manner to the advisor, who can then act quickly to advise accordingly. This speedy resolution minimises the debtor’s stress and anxiety, reinforcing a trusting relationship between both parties and enabling ease throughout the debt management process.
For The Insolvency Market as a Whole
The likelihood of insolvency case approval drastically increases as Open Banking emerges into the market. Gaining secure access to debtors’ financial information gives advisors a clearer understanding of spending habits, which allows for an expedited affordability assessment. Data is also accessed in real time, where the speed and efficiency of Open Banking enable more accurate and timely advice and communication between advisor and debtor. The insolvency market has been and will continue to move towards a secure and compliant space with the introduction of Open Banking, as traditional paper-based ways of exchanging data will no longer be the industry standard. These new transactional methods will ensure that debtors’ information remains protected.
Embracing the Open Banking revolution
As the industry becomes more digitally connected, it’s becoming a top priority for debt firms and insolvency practices to keep up with the pace of technology and the new regulatory landscape.
We at HubSolv are on hand to help our customers to embrace the full potential of Open Banking technology. Our client portal, HubSolv Messenger, seamlessly integrates with our HubSolv CMS and combines Open Banking with automation to streamline the process of individuals’ affordability assessment; ID verification, credit checks, bank statements and AML reports.