Varengold’s London boss Alison Harwood has predicted open banking to be at “the front and centre of the 2020s”, adding that it will allow borrowers who were previously unable to secure affordable loans to access finance.
Harwood said the institutional funder, which has backed several peer-to-peer lending platforms, has partnered with a fully digitalised lending platform in the Netherlands which was built around leveraging open banking.
Speaking at the FinTech Connect conference last month, she said that through the data sharing initiative there will be great developments coming out to unlock segments of customers who were previously unable to access affordable finance for a variety of issues, such as having a thin credit file.
Harwood added that there will also be developments via open banking for business lending to very small companies.
“Whilst open banking has been around for a while it will be at the front and centre of the 2020s in terms of showing what lending can really do and offer to borrowers,” Harwood said at the virtual conference.
“If you do not have a digitalised lending process it’s very difficult to price every small ticket price loan in a way that adequately reflects the risks of borrowers.
“Add to that a faster and more seamless onboarding process and the ability to leverage open banking to assess affordability, and it’s a really powerful combination.
“That kind of approach can be used to unlock hidden credit segments of the market.
“Open banking will be very important. We’re only beginning to see its potential in lending.”
Read more: P2PFN’s predictions for 2021