Open banking has played a pivotal role in the credit market since the start of the pandemic, and this trend is expected to continue post-Covid, Equifax has claimed.
According to new data from Equifax UK and AccountScore, since the start of the first UK lockdown in March 2020, there has been a 140 per cent surge in the adoption of open banking across the board.
“Facing an unprecedented challenge, commercial and consumer lenders have accelerated their digital transformation, embracing open banking,” said Emma Steeley, chief executive of AccountScore, an Equifax company.
“This is allowing credit providers to make more informed and timely decisions utilising real-time current account data, and ultimately helping thousands of businesses and individuals access billions of pounds of credit at a time of critical need.”
AccountScore has predicted that with income shocks, rising unemployment and personal debt forecasted as government support unwinds, the financial landscape for consumers and businesses remains uncertain.
However, Steeley added that open banking will have a vital role to play in this volatile environment, not only in assessing true affordability at the point of credit application but in identifying when consumers are becoming more financially vulnerable and fast tracking tailored support to get to the right outcome.
“Lenders must harness this moment of transformative change, and not let inertia stifle innovation,” said Dan Weaver, open banking expert at Equifax UK.
Read more: CMA launches open banking consultation
“The mortgage market is extremely complex, but through wholesale collaboration with fintechs, brokers and lenders, open banking solutions can fully digitise applications – dramatically streamlining the process while making it safer, fairer, quicker and less susceptible to fraud.
“As we mark a year since lockdown, we in financial services should be looking to speed up innovation, not slow it down.
“Given the right platform, open banking can greatly improve financial services, helping achieve a harmonious melding of smart automation with human interaction and intervention, while making feats such as ‘instant mortgages’ a future reality.”