1 December 2022
Changes to Open Banking 90-Day Access Consent Rule
The good news is that the 90-day rule is changing! The FCA, the UK’s finance regulator, has announced a change in the rule with effect from November 2022.
Open banking has been transforming the financial industry by securely sharing financial data between different financial institutions with the customer's explicit consent.
Auto finance is one of the sectors that have been prominently benefiting from open banking by revolutionizing how auto finance lenders operate, leading to enhanced customer experiences, streamlined processes, and heightened transparency.
Understanding Open Banking
Open banking facilitates the secure exchange of financial information with the help of Application Programming Interfaces (APIs). This enables customers to grant third-party providers, such as Planky, access to their financial data. This empowerment of customers fosters informed financial decision-making, while enabling financial institutions to provide personalized services that cater to individual needs. How Open Banking is Reshaping Auto Finance?
Enhanced Customer Experiences
Open banking is providing auto finance lenders with a wealth of data that can be harnessed to offer tailored financing solutions. This enables them to provide auto loans that are aligned with the borrower's financial capacity, elevating customer satisfaction and fostering stronger relationships between lenders and borrowers.
Faster Loan Approval Processes
Customers now have the ability to grant lenders access to their financial history and transactions, thereby expediting the verification process. This leads to accelerated loan approvals, reducing waiting times for borrowers and enhancing operational efficiency for lenders.
Risk Assessment and Fraud Prevention
Lenders can analyze spending patterns, sources of income, and credit history to gauge the applicant's creditworthiness. Furthermore, increased access to data aids in real-time fraud prevention, as it enables the detection of inconsistencies or suspicious activities.
Customized Loan Offerings
Leveraging an applicant's financial data, lenders can tailor loan terms to align with the borrower's specific financial circumstances. This level of customization surpasses the conventional credit score-based lending model, ensuring that borrowers are presented with loan options that are not only viable but also tailored to their financial objectives.
Data-Driven Decision Making
Open banking furnishes lenders with a wealth of data that can be utilized to gain valuable insights into market trends, customer preferences, and loan performance. This empowers lenders to make well-informed decisions regarding product offerings, interest rates, and risk management strategies.
Jennifer Rothwell, COO at Unity Auto, extols the benefits of Open Banking facilitated by the Planky Open Banking Platform. She states, "Open Banking relieves the pressure of assiduity for our underwriters. We strive for an efficient car-buying experience for all of our customers on the basis that our process is simple, quick, and secure. By ensuring our underwriters make informed, data-driven decisions we believe this will create equal opportunities for our customer base and with the help of Planky... we are able to achieve this!”
Conclusion
Open banking is a transformative force in the auto finance landscape, fundamentally altering how lenders interact with customers, evaluate risk, and provide personalized services. The age of data-driven decision-making and customer-centric offerings is upon us, driven by the secure exchange of financial information through APIs.
As auto finance lenders continue to embrace the open banking paradigm, they are poised to unlock new vistas of growth, innovation, and heightened customer satisfaction.
