Our latest research report, Lender Insights, found that one in four lenders (26%) now use Open Banking technology, with 51% of those who haven’t yet used the technology planning to do so in the future. Nearly nine in ten (87%) of those say they plan to adopt it within the next two years, meaning that by 2023, seven in ten lenders (70%) overall are expected to be using Open Banking.
The report demonstrates the seismic impact of the COVID-19 pandemic on lenders’ appetite to invest in technology that gives them a comprehensive view of a borrower’s financial situation to enable better lending decisions - including affordability and creditworthiness.
The impact of the pandemic on lenders’ ability to operate as usual was profound. The report shows that around eight in ten (78%) lenders changed their rules about who they could lend to in the pandemic. Almost half (46%) of these lenders changed their policies because it was too difficult to verify borrowers’ income, for reasons including furlough and redundancies.
With 11.7 million people furloughed at some point during the pandemic, and unemployment at 5.2% in Q4 2020, more than a third (36%) of lenders changed their lending rules in order to avoid those deemed ‘higher risk’ customers during a period of huge uncertainty. This meant that lenders were missing out on new business, with 30% of those who changed lending policies during COVID-19 experiencing a loss of revenue from new customers.
30% of lenders saw an increased need for new data sources. Nearly half (47%) of all lenders surveyed believe that Open Banking could help their organisation save time and cut the cost of credit decisioning in the future.
To read the full report visit here.