Open Banking – the quiet revolution
Emma Steeley, CEO, AccountScore
The year 2019 began with some interesting statistics about household debt. Figures from the TUC showed that Britain’s household debt mountain had reached a new peak, with UK homes now owing an average of £15,385.
The level of unsecured debt as a share of household income is now 30.4%, the highest level it has ever been, and well above the £286bn peak in 2008 before the financial crisis, according to the industry trade body.
With Open Banking now in its second year, one of the issues we put our mind to was how Open Banking could reshape the world of financial services.
The Open Banking initiative was driven by the UK’s Competition and Markets Authority (CMA) to drive improved financial services, to give customers more choice between financial service providers, and to allow consumers to access cheaper financial products.
And we have seen great success in these developments, last year having provided the architecture to allow HSBC to be the first tier-one bank to make a lending decision through Open Banking. This has expanded this year, making M&S Bank the first lender to offer Open Banking enabled mortgage journey in the UK, and First Direct Bank the first provider to use Open Banking across all of their unsecured products including personal loans, credit cards and overdraft applications.
Making it easier for consumers and financial institutions to make faster and better-informed lending decisions is one of the most significant achievements of Open Banking, but we’ve always been acutely aware that this is just one element of financial enablement.
The real purpose of Open Banking is not just better technology for the sake of it but driving the movement towards the better serving of consumers through responsible banking and lending, as well as support the future of better and more enhanced debt management.
This is why last month we announced the launch of an Open Banking solution for the debt advice and debt solutions sector, working with The Insolvency Panel.
Principally what this achieves is to allow the financially vulnerable to easily share their data with financial institutions securely, in a real time environment and provide a full and accurate assessment of data in the required format. In turn this allows insolvency practitioners and debt management plan administrators will also be able to benefit from accurate information throughout the life of an arrangement.
This means that practitioners can now continually monitor a consumer’s financial circumstances, providing ongoing assistance in the rehabilitation out of debt over a period of time. The result; improving the experience of people struggling with debt and improve financial awareness for customers, while providing a robust, easy to use platform for the industry.
This is why you won’t find us talking about purely tech very often. Yes, the development of Open Banking technology is hugely important, but the discussion should be more about what it does, than what it is. Debt advice is something that we are incredibly passionate about. Improving financial awareness and inclusion for customers goes to the heart of what we view as the true benefits of Open Banking. It may be a quiet revolution, but it’s an important one, and one that should be championed.
Open Banking: a force for good in society
Open banking is enabling money advice organisations to quickly, accurately and securely build a clear picture of customers’ financial situation, to help them manage problem debt. This video examines one of these initiatives, with expert contributions from Faith Reynolds, Independent Consumer Representative, Open Banking, Caroline Hamilton, Sector Engagement Manager, The Money Advice Service, Tim Rooney, Commercial Director, Big Issue Invest, and Heather Keates, Founder & CEO, Community Money Advice.
Helping the 20m people in the UK with money worries
By Stuart Bungay, CEO & Co-Founder, Tully
The average UK adult owes a whopping £30,965 in debt. Out of the 75% of all UK citizens that are facing some form of debt 50% experience symptoms of stress which directly impacts physical and mental health.
The people that actually gain the confidence to seek advice, usually do so two years after they first found themselves in financial difficulty. And of those people who do seek advice, due to lack of time, everyday stresses and information overload, only 17% actually receive the support that they need.
Debt’s not a dirty word
In the UK we suffer from ‘stiff upper lip’ syndrome. We have a reluctance embedded in our very core that stops us from sharing anything that might make us feel vulnerable – including problems with debt.
But if most people have debts it shouldn’t be something that we’re ashamed of or something we should face alone. Tully has been created to help anyone who is feeling stressed about their debts to understand what’s happening with their money and then, with our support, work out the right plan to deal with their debt.
First ever digital debt advisor in the UK
As the first ever digital debt advisor in the UK, Tully offers people a faster, simpler and less intrusive way to understand their budget and how much they can afford to repay on their debts. All delivered online so they can tackle their debts at a time and place that is best for them and where they’re in complete control. By making debt advice available at the touch of a button, Tully fits around people’s everyday lives. Plus it’s already proving more accurate than the self-declared or estimated standard procedure of today.
Open Banking: The future of debt management
Currently, the income and expenditure (I&E) process to get debt advice is a huge investment of time – which we all lack – and uses self-certified methods of establishing how much money a person has left every month. With 16 million people in the UK having less than £100 in savings, getting this affordability number wrong can have a serious negative impact on people.
Open Banking changes the way that I&E is delivered. Tully uses Open Banking to streamline the data gathering and categorisation process along with advanced conversational AI and machine learning to get to a far more realistic affordability position in minutes, not hours or even weeks.
Tully then combines this rich and personalised financial picture with decision logic that uses thousands of data points about individual and household circumstances to provide highly personalised debt advice.
Tully is creating the future of debt advice. One where data and technology is used to support peoples real-life circumstances. It means advice and repayment plans are more realistic but also more flexible, so when life changes so can your advice and repayments. This all means more sustainable repayment plans and lower breakage rates so people clear their debts faster, stress less and start planning for the future.
Tully is helping people take control of debts on their terms.