Open Banking: good or bad?

In this article, you will learn how, as a consumer credit firm you can apply open banking data to understand borrowers better in these uncertain times.

The consumer credit landscape is changing rapidly due to globalization and pandemics making it impossible for lenders to continue business as usual while still relying on traditional credit bureau data. The consequence of the Covid-19 pandemic has brought affordability issues to the table with Woolard’s review published in December 2021. This implies that lenders must take proactive actions to make sure they are making responsible, informed lending decisions before lending the funds and chasing repayments later.

Traditional methods are outdated

Most lenders are reluctant to perform full credit checks on customers, as this leaves a permanent record buyer’s credit profile. A soft check is a credit check that doe not affect the credit history of the borrower and ensures customers can access credit quickly and easily. Despite being the traditional way lenders assessed customers for the past 40+ years and offer information on whether the individual has been declared bankrupt, such method provides lenders with only a basic picture of the customers’ current financial position, good or bad.

Credit bureau data = comprehensive?

Traditional credit data does not provide lenders with enough real-time information to assess the creditworthiness of individuals. Using consumer-consented Open Banking data, lenders can now access a consumer’s up-to-date financial information, without having to perform unnecessary hard credit checks – ensuring thorough checks whilst passing leads to our panel of lenders.


Open Banking empowered technology will be instrumental for our users. Open Banking solutions allow providing greater cash convenience, using rich affordability insights, and ensure we are offering qualified borrowers to our lending partners and protecting vulnerable customers: aiding more sophisticated affordability and creditworthiness checks whilst avoiding frictions at the checkout for customers. 

Open Banking helps to unlock one spending patterns, without having to perform hard credit checks that might leave a bitter aftertaste. it’s a secure way for users to share up-to-date financial information, like spending habits, income, regular transactions, and any existing loans. With permission from the customer, Buy Now, Pay Later providers can use this technology to get an in-depth overview of a customer’s financial health, giving them the power to supply fast and accurate credit decisions.

The advantage of Open Banking is that information is often viewed quickly and simply. Buy Now, Pay Later needs more rigorous affordability checks to guard both lenders and borrowers, but cannot afford to introduce high-friction processes like phone calls or document verification. within the fast world of online retail, customers don’t want their shopping experience bogged down by unnecessarily slow checks.

Detecting recent loss or significant change in income

With many of us experiencing total or partial loss of income due to unprecedented times, customers’ ability to repay credit could also be impacted significantly. Thanks to Open Banking we can accurately detect and account for the recent loss of income.

Identifying new borrowing in advance

You will have access to data associated with recent loans received and missed payments through our Recent Borrowing Indicator. you’ll get information on recent borrowing, including the amount and total value of loans the applicant has taken calls at the last 30 days and three months. This feature provides a critical updated view of a customer’s credit commitments, which might take 30-90 days to surface on a standard credit report. We highlight recent loans and missed payments

Lack of information around recent borrower distress

We analyze and interpret changes in financial behavior with our Risk Insights View. It is designed to bring you everything you would like to assess risk into one easy-to-use screen. The feature presents key financial behavior indicators like time spent in unarranged overdrafts, predicted gambling spend, returned direct debits, and use of various sorts of credit, employing a simple traffic signal system to spotlight the behaviors that require investigation. You can also deep dive into trends in the behavior over the last year and all transactions relevant to the behavior. 

Closing thoughts

The use of Open Banking could help providers distinguish between customers who have a legitimate need for an advance and people that are in longer-term financial difficulty. Those within the latter category could quickly be directed towards debt advice and support, instead of removing a loan that’s unsuitable which could end in bigger problems down the road.

JO1N’s integration with Open Banking providers is an integral step in acquiring the tools we need to continue to provide flexible financial products to customers. Real-time Open Banking insights are crucial in providing fairer credit for all by securely sharing buyers’ financial information with their selected provider, thus promoting fair competition and responsible lending practices. Moreover, will allow us to see where customers spend, what financial services they have, and what utilities they use. There is a large scope of sales and profiling opportunities available from this openly shared customer data. Bank data allows us to treat our customers individually, according to their circumstances, and to ensure a better experience for everyone.

JO1N us and borrow responsibly