Benefits of offering open banking

Wednesday 8th November 2023

Man with a coffee looking at his phone with his laptop open

Open banking is used as part of our application process, allowing us to see customers’ bank account transaction data digitally. This helps us to make a more informed and accurate lending decision. It also gives customers who would have previously been automatically declined for retail finance a greater opportunity to be accepted.

By using open banking to improve our acceptance rates, we can ultimately generate additional volume of business for retail partners like yourself.

In this article, we’re sharing some of the ways open banking enhances our retail finance offering and benefits your business.

What is open banking and how do we use it?

Open banking is a secure online system that is fully regulated by the Financial Conduct Authority (FCA). It gives us digital access to a customer’s financial information, such as their bank account details and transaction data. We can use this information to verify income and expenditure almost instantly, without needing to manually assess bank statements.

We use open banking as part of our referral process. Here’s how it works:

  • A customer applies for retail finance online or in-store
  • If we don’t have enough information from a customer’s application and credit report to make an instant decision, we’ll refer their application and ask them to allow us to use open banking
  • Your customer will be sent a link via email to grant permission. They’ll be taken to the platform to choose what information they share with us
  • We’ll ask for details of the customer’s main bank account. They’ll then be taken to their online or mobile bank account and asked to enter their security details. Their bank will then grant us access to their data
  • We’ll conduct our additional checks using information provided by open banking and make a decision
  • If accepted, the customer will continue on their retail finance journey and will be asked to read and e-sign their credit agreement

Open banking benefits your business

Increases acceptance rates

We use open banking on customers whose application would have been automatically declined. Once we gather a bit more information to get a fuller picture of their finances and spending habits, we often find we’re then able to offer finance.

Put simply – we’re able to turn potential declines into accepts thanks to open banking.

It’s worth noting that not every declined customer will get an open banking request. We typically only send requests to customers who have a thin credit file, or if we need to get a better picture of their affordability.

Boosts business

A greater number of accepted finance applications results in more customers.

Our own research shows that 57% of customers would not have made a purchase without finance.

No one wants to see customers walk away after being declined for finance. As your retail finance provider, we’ll do all we can to help improve accept rates and drive sales, including implementing the use of open banking.

Supports customers

It’s disheartening to be declined for finance, particularly for reasons such as having a limited borrowing history.

We want to make sure your customers have a great experience shopping with you – and that means finding the finance application process smooth, simple and fair too.

By using open banking, customers can:

  • Avoid the hassle of sending us hard copies of their bank statements
  • Get a much quicker decision, without waiting around for bank statements to be received and manually reviewed
  • Increase their chances of being approved so they can access and enjoy their chosen purchases

All this leads to a much better experience, which reflects positively on your brand.

Helps to make more accurate lending decisions

Open banking digitalises part of the decision-making process, ensuring greater consistency.

By gaining greater understanding of a customer’s financial circumstances, we can more accurately assess whether they’re in a position to take on any additional debt. While we want to offer finance to as many customers as possible, it’s also a priority to lend responsibly to customers. Therefore, we must do all we can to ensure that finance is only offered to suitable customers to avoid placing any additional stress on a customer’s finances.

Ultimately, open banking helps us to make sure we’re delivering the right results to your customers.

Speeds up the referral process

Asking customers to manually post printed bank statements can be a thing of the past. Of course, we still offer this option, but the majority of customers find it much more convenient to allow the use of open banking.

It takes just a few minutes for customers to consent to open banking. And, because the invitation is sent via email, this can all happen in-store, online or on-the-go – wherever suits your customers best.

Gives customers a quicker decision

In the majority of cases, we can give an automatic lending decision based on open banking information (though our underwriting team may still need to manually review a small selection of applications).

This makes the referral process much quicker for customers. No waiting around for a decision, so you can get on with making a sale.

No additional costs or complications

You’ll be pleased to know that we won’t charge you a thing when we use open banking. You’ll get all the above benefits, your customers will receive a better service, and there’ll be no additional costs to consider.

Furthermore, there are no admin considerations either. A customer will automatically receive a link to their own email address if they’re eligible for open banking so there’s nothing extra for your team to worry about and no additional training is required.

If your customers have any questions or queries about open banking, please refer them to our comprehensive open banking guide.

Is it time to work with a retail provider who puts you and your customers first?

Everything we do is designed to support your business and your customers. Our market-leading technology contains unique functionality that enables us to attract more customers, increase accept rates and drive sales.

To find out more about our features and how your business can make the most of our application platform, get in touch with the team.