UK Money lenders open banking - Nordigen

55% of UK money lenders are adopting open banking by year's end

| Article by: Antonis KazoulisProfile Image Antonis Kazoulis 3 min

Open banking adoption skyrocketed during the pandemic. According to credit management firm Know-it, 55% of UK money lending institutions are set to adopt open banking by the end of the year.

How did Covid fast-track the adoption of open banking? They say necessity is the mother of invention and in the case of lending, both demand and supply had to work together to figure out a solution.

The pandemic put millions of people in dire financial situations, with businesses closing down, loans getting extended and incomes freezing with no sign of when things would get better. On the supply side of things, traditional banking institutions were forced to close as well cutting the traditional way of lending money. People needed money and banks weren’t able to give it to them.

Enter open banking

A digital solution to lending money was no longer an option but a necessity. The technology allows participants to determine loan eligibility online, verify customers through KYC and onboard without the chaos of manual documentation. By adopting open banking, both business owners and lending institutions managed to save time, effort, and resources.

According to the Know-it research, 19% of lenders admitted that Covid-19 was the reason they accelerated plans to implement open banking-enabled products as it has now become “evident” there was a need for it.

Here’s what Lynne Darcey Quigley, Founder and CEO of Know-it, had to say about the research results:

“Even though traditional banking doesn’t entirely disappear, it’s undesirable to deny the relevance of fintech. Innovations in technology allow for easy money transfers, secure online payments, and automation of business processes. It is no longer an option for traditional banks and firms wishing to survive to remain stagnant in the wake of a tumultuous period marked by the threat of a pandemic and there exists a huge opportunity for fintech businesses who are seen as more agile, nimble and flexible to collaborate and partner with more traditional banks and financial services firms who can offer experience, access to networks, supply chains and scale.”

Her comments are on-point and not a product of just her company's findings. According to further research, the total value of open banking payments in the UK is expected to surpass the £210 million mark this year. To compound this sentiment, Juniper Research found that around 53% of the world’s population could be using digital banking by 2026.

This is not a trend but the new normal, the evolution of not simply the lending industry, but the financial industry as a whole. Gone are the days when a company could simply worry about selling their products or services. In the digital age, companies need to worry about credit management, accounting, and a whole lot of other finance-related functions.

Open banking opens the doors to agile financial products and service customisation. Open banking has the potential to not only increase revenue streams for financial institutions but stretch customer reach for money lenders.


Recommended articles