BLOG: 6 ways open banking will reshape the lending landscape in the UK

6 ways open banking will reshape the lending landscape in the UK

The UK’s Open Banking regulation has always held the promise that it could revolutionise banking, lending and other financial services. Never has that been more obvious – and more needed – than in the current COVID-19 crisis. Built on the idea that bank account holders should be free to share their banking data with trusted parties, open banking also holds the key to faster loan application processing and better tailoring of loan offers to the applicants’ financial situation.

At Yolt Technology Service (YTS), we’re keen to see these changes happening. We are the top open banking API provider in Europe by coverage, and we partner with forward-thinking businesses to help them achieve their goals with open banking.

So, in what ways can we expect open banking to reshape lending in the UK?

1. Faster and better decisions with enhanced, instant data

A traditional loan application process still often requires a lot of paperwork. On actual paper. Or, if you’re lucky, in pdf. With Account Information Services (AIS), applicants can give you access to their bank accounts directly – so you can download their bank transaction detail in a perfectly reliable, machine-readable format. And because each bank uses its own standardised transaction format, you can use data enhancement algorithms to pre-analyse the raw data for you, making it easier to draw conclusions.

That saves time. For you and your customers.

2. Better customer onboarding experience with instant identity verification

Bank-side authentication is one of the better measures of security out there. Why not harness it for your own purposes? Ask an applicant to give AIS consent for a bank account, and you can be certain that this account is actually theirs. In other words: simply the fact that they can get access to a bank account that’s in the applicant’s name proves that they are who they say they are.

This is an easy way to provide a much better onboarding experience for your applicants.

3. Overall better customer experience

It’s not just about onboarding and identity verification. Open banking was designed to give users an overall better experience on many different levels. Instead of downloading bank statements, they can simply sign in to the various bank accounts they want to share data from. Instead of uploading – or even emailing! – sensitive personal information, they can rely on a transfer system that was designed to be secure from the ground up. And, of course, because all the data is machine readable, complete and guaranteed to be accurate, your customers will benefit from the faster processing you’re able to do.

4. Greater applicant acceptance rates
The best predictor of future good financial behaviour is proven past good financial behaviour. With AIS, you get an intimate view of your applicant’s spending. And with advanced categorisation algorithms like the ones in the YTS API, merchant and income identification and expense forecasting is easier than ever. This makes it much easier to make an offer that fits the applicant’s spending profile instead of having to reject an application.

5. Less fraud with data that’s guaranteed to be complete
With data pulled directly from the source, it is impossible for applicants to ‘doctor’ their transaction statements. Within the window of consent, you can see every transaction that was made from or into this bank account – for all the bank accounts your applicants share. Not only does that mean that the data you base your loan approvals on is more complete than it’d normally be – it’s also more reliable.

6. Absolute certainty that the repayments come from the applicant’s account

With open banking comes not only the power to access real-time financial data, but also the opportunity to offer your customers a frictionless payment method – both for incidental money transfers and standing orders such as a monthly loan repayment. The payment is instant and can only be authenticated by the bank account holder. This reduces the risk of fraudulent payments, so you don’t have to worry about any associated operational hassle.

Upgrade your business processes with YTS

YTS has been a frontrunner in open banking since the regulation was first announced. Not only were we the first third-party provider to make a successful open banking API call, we even helped shape the regulations. In the years since then, we’ve become one of the most experienced in connection bank APIs to our own – building, managing and maintaining the API connections our customers need to streamline their operations.

Our proven experience, coverage and security-minded DNA make us a credible, stable open banking partner. Would you like to take the next step in operational efficiency with your lending business? Feel free to contact us to see where open banking technology can help you.

About Yolt Technology Services 
YTS (Yolt Technology Services) provides open banking expertise and services to other organisations through a single and secure API - building, managing and maintaining Account Information Services (AIS) and Payment Initiation (PIS) connections, alongside Data Enrichment and Know Your Costumer (KYC) services, for top financial institutions and ambitious tech businesses.  

Launched in 2017, YTS offers the most comprehensive open banking service to companies on a scale no other competitor can match. In October 2020, YTS became the first Open Banking provider to reach 1 billion API calls, averaging over 26 million API calls every week, with its API coverage accounting for 95% of bank accounts in the UK, as well as 90% in the Netherlands and France, and 80% in Italy, Spain, and Belgium.

From the very beginning, YTS worked closely with the Open Banking Implementation Entity (OBIE), other TPPs and financial institutions to shape and launch open banking in the UK and was recently recognised as the Alt-Fi Open Banking Provider of the Year in their 2020 awards.
YTS’ API technology has also powered the Yolt App since its inception, and YTS recently launched as a separate but connected business. YTS works both independently of and simultaneously with the Yolt App, with its APIs still powering the platform, and is now expanding into the open banking service provider market. The combined group is led by Nicolas Weng Kan, creating a cohesive overall strategy and ensuring that both businesses are evolving in the same direction. 

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