Experian has been at the forefront of open banking for some time now, and plans to push even further towards truly open finance in the future.
Image source: Rob Haslingden/Experian.
Open banking has become one of the most popular adaptations for both fintechs and big finance alike and, following the introduction of the EU’s Second Payment Services Directive (PSD2) in January 2018, has changed the way millions of people view their finances.
Experian was the first Credit Referencing Agency (CRA) to be awarded an open banking licence back in June 2018, just 6 months after the implementation of PSD2.
AltFi caught up with Haslingden (over video call) to see how Experian is helping to roll out open banking to the masses.
“A global phenomenon”
Despite the implementation of open banking potentially threatening Experian’s business model, the credit reference firm welcomes its wider adoption.
“We don’t see open banking as a threat, more an opportunity,” Haslingden told AltFi.
“Open banking helps us to complement the credit information data that we already have with other information about a person’s financial wellbeing, which creates a more holistic picture of someone’s financial health.”
“It is a global phenomenon and the UK is leading the way, but the rest of the world is catching up,” he added.
So, while some people might assume that open banking might threaten the very thing Experian does—collating a person’s financial data to produce a wider picture of their financial health—the agency is leading the charge.
Experian claims to be one of the largest providers of open banking in the UK, processing over 50m API calls every month through its open data platform.
Coronavirus and open banking
Recently, Haslingden says that, alongside the steps taken to widen the open banking net, there has also been a lot of interest in increasing the affordability of credit.
“We’re getting a lot of engagement with both debt advice charities, as well as lenders, who are looking to support people in bad situations, and the anticipation is obviously with COVID is that more people are going to fall into debt through no fault of their own,” Haslingden told AltFi.
“However, we think that COVID-19 will encourage more people to share data because the more people who are in financial hardship, are motivated to share data to help them get loans or credit that will help them through the crisis,” he added.
As well as offering a credit rating service, Experian is also looking deeper into the affordability of credit, and how to support that through open banking, to help those most affected by coronavirus.
Fintechs have long embraced open banking, which is soon to spread out even further into open finance.
Haslingden told AltFi: “Open Finance has the potential to fuel the growth of fintech and the access to data will be critical for companies wanting to bring a product or service to market.”
“A great example of this,” Haslingden says, “is the Pensions Dashboard. It’s a great example of where open finance would benefit fintechs and benefit consumers.”
“Experian was involved in the early concept of the Pensions Dashboard Programme (PDP), which would allow the freedom of sharing pension information by consumers from their pension providers to help them get better advice on how to use their pensions in later life,” Haslingden told AltFi.
Just last week it was revealed that the long-anticipated PDP had finally entered the next stage of “informal market engagement” before the formal procurement process, which is due to begin in Autumn 2020.
Ultimately, it’s getting harder and harder to ignore the importance, and prevalence, of open banking in our everyday lives—no less because more and more of us are using open banking-powered apps.
Experian, despite the initial appearance of being threatened by the spread of open banking, is leading the charge.
Sign up to the Daily Disruptor Newsletter
— to www.altfi.com