The UK’s under-35s are 21% more likely to want to share bank data to access loans than in May 2020, per a Credit Kudos report. Credit Kudos is a challenger credit reference agency that aggregates borrowers’ transaction data to help lenders assess their creditworthiness. It surveyed 2,000 consumers in the UK from March 12–16, 2021.
The younger demographic is placing its hopes in open banking to better inform lenders of borrowers’ finances.
The findings underscore the partnership opportunities for fintechs that facilitate lenders’ use of open banking, and the UK’s transition to open finance will further improve credit underwriting. Under-35s will flock to lenders that offer open banking capabilities because that’s where they will be more likely to access credit. In response, a number of lenders are already moving forward with open banking, presenting partnership opportunities for fintechs: Incumbent Admiral Financial Services Limited partnered with Credit Kudos in December to help verify borrowers’ income, and alt lender Oakbrook Finance teamed up with fintechs Clearscore and AccountScore. The UK government is now planning to expand its Open Banking regulatory framework—which requires that banks share account data with customers’ consent via secure APIs—in the coming years to cover other types of financial data, like pensions, investments, loans, and insurance. The transition from open banking to open finance will give lenders an even more holistic view of borrower finances to inform their underwriting.