Open banking driving financial innovation

A new force is blasting through the European financial system. Open Banking is forcing traditional banks to share customer data, with permission to third-party service providers. Open Banking is changing the landscape of finance. In this London is at the forefront. Freedom Finance is a search engine for loans. Jake Ranson, Freedom Finance’s chief customer officer, says the new data laws underpin its service. He stated that it allows them to collate the most comprehensive view of a borrower and present back to them a better and broader range of personalised offers than they could have got from their credit data alone.

Zach Perret, co-founder and chief executive of the company, has previously described the impact open banking has had on banks and fintechs as a sea change. Plaid’s software helps to connect more than 15,000 US banks. Now European fintech companies can use Plaid’s service to connect to UK bank accounts. It’s still early days for Open Banking, and the opportunities are still being explored. CreditLadder uses Open Banking to report rent payments to credit reference agencies. It thus improves the credit score of the user.

Monzo bank’s head of Open Banking, Kieran McHugh, said that he will think in general people tend to overestimate the potential of new technologies in the short term, and underestimate the potential of new technologies in the long term. Anyone entering the UK financial markets is without a doubt going to hear a lot about Open Banking. The impact of the revolution is yet to be felt. In the US, large tech companies are already established to reap the benefits of open banking. Google has become the latest firm to move into banking by offering smart current accounts.