Case studies

AperiData’s Credit Console expands access to loans for HEY Credit Union customers

24 November 2023

HEY Credit Union is a not-for-profit financial co-operative which aims to provide fair and responsible savings and loans for the people of Hull, East Yorkshire, Northern Lincolnshire, and the YO postcode area. Operating for a quarter of a century, it services more than 16,000 adult members, around 1,350 junior savers, and administers £14.2 million in savings.

A traditional enterprise in many respects, HEY Credit Union’s relationship with open banking provider AperiData has brought it to the forefront of digital lending.

AperiData is an FCA-regulated credit reference agency, and an account information service provider (AISP) that operates as an open banking provider. Its software maximises the potential of open banking and other data sources, enabling lenders to make smarter decisions for consumers and small business customers.

Its leadership team has used their decades of experience in credit risk to develop the firm’s Credit Console, a front-end system designed to help lenders (primarily serving small businesses and consumers) and their underwriters make faster, more informed decisions. Supporting credit unions is a growing priority for the firm.

Andrew Bonsall, AperiData Co-Founder and Chief Operating Officer, explained: “As a regulated credit reference agency and open banking provider, we use open banking data to provide our clients with greater consumer insight so they can make better, more informed lending decisions.”

How AperiData works

Essentially, AperiData takes open banking data and uses it to build profiles and data insights from which lenders can create detailed financial assessments of individuals, down to individual transactions. Crucially, it does this in near real-time, unlike the monthly snapshots provided by traditional credit bureaus.

AperiData also has all credit reference agency permissions so that its clients have the reassurance of regulatory compliance.

In terms of deployment, the AperiData Credit Console is accessed through a browser like any other website, or by using APIs which can be integrated directly into an application provider’s platform.

Clear view of customer finances

AperiData aims to modernise the consumer credit scoring market by blending near real-time financial data with traditional banking data to create highly specific customer insights for its clients. In turn, this allows lenders to offer more tailored products to customers who could otherwise find themselves excluded from mainstream lending and resorting to costly credit cards, overdrafts, payday lenders, or even unregulated lenders.

The platform categorises all transactions and can identify potential high-risk spending patterns such as gambling, and potential signs of financial vulnerability such as missed payments or excessive borrowing. This gives lenders a consistent view of where customers spend their money and additional insight, such as income and expenditure trends. Moreover, it saves customers and underwriters from ploughing through old bank statements to retrieve that information themselves.

AperiData also helps lenders eliminate the need for storing and managing vast quantities of PDFs and paper-based financial documentation.

Apart from the significant time savings, larger loans can be approved with greater confidence, removing stress for the customer, and expanding borrowing opportunities for under-served customers.

Despite its proud heritage serving the people of its home region with responsible loans, HEY Credit Union had remained a largely paper-reliant lender. Though plans were being formulated for a digital overhaul, COVID lockdowns meant those plans had to be actioned quickly.

Unable to see their customers in person, and with customers often unable to upload electronic bank statements, HEY Credit Union needed an alternative.

Using AperiData’s open banking-powered technology, with their customers’ consent, HEY Credit Union was able to access customer banking information going back further than the 30 days covered in a standard bank statement.

Matthew Stevens, HEY Credit Union Chief Executive Officer, said: “If we’ve got 90 days’ worth of bank data, we can see all the money coming in, including other loans that might raise a question for us. This allows us to have a proper conversation with a member where we’ll often discover that there’s a perfectly logical explanation for any anomalies. There’s no question that open banking gives us a much better picture of a customer’s affordability.”

Increased loan approvals

Armed with a more holistic view of a customer’s finances, including details of long-standing Direct Debits and overdraft limits, HEY Credit Union could make more accurate affordability assessments. Not only did this make loan approvals safer for itself and its customers, it enabled the credit union to approve many more loans.

In marginal cases, where traditional credit bureau data does not provide a credit union with sufficient information to make a decision, HEY Credit Union says around 90% are now getting approved because of the accuracy and comprehensiveness of open banking data, particularly for larger amounts.

For HEY Credit Union’s larger loans (those exceeding £1,000), the Yorkshire-based co-operative has found open banking invaluable. While a customer can have an exemplary credit report on paper, incomplete or inconsistent reports from traditional credit reference agencies can muddy the process, meaning lenders often miss vital information. HEY Credit Union has found that open banking can plug this gap, adding greater certainty when approving loans that run into four figures or more.

The organisation is also able to process loans faster. In the pre-open banking days, its customers might have had to wait a number of days to have a loan approved.

Today, for its existing members, the whole process is often completed on the same day the loan was requested, meaning customers get faster access to much-needed funds.

It also delivers cost savings for the credit unions themselves.

Phil Dilley, AperiData Co-Founder, said: “Open banking is streamlining a lot of credit unions’ manual processes, whether it’s Know Your Customer, income verification, lending, back-office operations, or forbearance. It can often take up to two weeks for a credit union customer to get their information together and submitted for manual review. Using open banking, we can reduce that to 24 hours. Such time-saving has a significant monetary value.”

Notes to editors

Open Banking Limited does not endorse any of the products or companies mentioned here.

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