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Peer2Peer Finance News | September 19, 2019

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Open Banking forecast to boost competition in consumer credit market

Open Banking forecast to boost competition in consumer credit market
Jordan Bintcliffe

MORE than three quarters of credit experts believe that Open Banking will make the consumer credit market more competitive, a new survey has revealed.

A poll of 100 global credit experts, interviewed at the recent Credit Scoring and Credit Control XVI Conference at University of Edinburgh Business School, found that just six per cent believed the data-sharing initiative would make the credit market less competitive.

Open Banking mandates high street banks to share anonymised customer data with approved third parties, aiming to boost competition in the financial services market.

Read more: Nationwide selects winners of Open Banking for Good challenge

“Open Banking, while still in its infancy, is allowing banks and companies offering credit to gain a greater financial understanding of existing and potential customers, and consumers to have greater autonomy and comparability when choosing financial products,” said Professor Jonathan Crook, deputy dean and director of the Credit Research Centre at the University of Edinburgh Business School.

“It’s little surprise to see global industry experts predicting positive outcomes related to Open Banking and its impact on the market for credit. As Open Banking platforms become more widespread, we expect to see an increasingly transparent environment, where credit is both more available and competitive.”

The survey also found that 42 per cent of respondents believe that a no-deal Brexit will boost demand for consumer credit, while 32 per cent think it would reduce demand.

Over half of respondents (51 per cent) from Europe, excluding the UK, expect credit to be more available in their respective country in the next year, compared to just 21 per cent who think it will be less available.

Read more: OBIE: Open Banking kick-starts innovation but needs improvement

In comparison, just 35 per cent of UK respondents believe credit will be more available over the next year in their home country, while 38 per cent expect it to be less available.

Read more: Open Banking challenge offers £1.5m reward for money-saving innovators