As new loans begin to outpace the repayment boom seen during the COVID-19 crisis, digital bank research Zopa reveals that over 40% of UK-based consumers would use Open Banking to “apply for credit if it increased their chances of getting an offer, gave them access to better rates, or made the application faster and hassle-free.”
As noted in an update to Zopa:
“Despite this, 8 out of 10 consumers have never knowingly used Open Banking. This disconnection reveals a strong demand for the benefits that Open Banking can bring to customers, despite a lack of knowledge of its underlying proposition. “
The Open Banking ecosystem already benefits nearly 4 million active users and is growing thanks to stable APIs, new consumer applications, as well as UK forward-looking or progressive regulation.
As stated in a blog post from Zopa:
“Adoption was primarily driven by the use of account aggregation services – by far the simplest and most popular use of Open Banking today. Aggregation has a positive impact on customers, with 50% saying that viewing all of their banking products in one place makes them more secure.
Research reveals that UK consumers are currently using Open Banking to do all of the following:
- To view all bank accounts in one place – 34%
- To keep tabs on all savings and investments – 28%
- To transfer money between bank accounts and savings – 27%
But Zopa’s latest research found that launching Open Banking to meet hitherto untapped customer needs, such as access to credit, could “rapidly accelerate this adoption, benefiting up to $ 40 million. active users by 2025 ”.
Research further reveals that UK consumers would use Open Banking ‘to apply for credit’ if it helped them in the following areas:
- Simplify the app, make the app faster and hassle-free – 44%
- Unlock better rates, access better rates on financial products – 43%
- Securing an offer, improving their chances of getting an offer from a lender – 40%
Zopa’s Open Banking report “suggests that these benefits are often best delivered when fintechs work together to deliver customer value in a simple, easy-to-use way.”
As stated in the update:
“A good example is Zopa’s partnership with Clear score, who used Open Banking to assess Zopa’s credit card eligibility. This resulted in a 37% increase in the number of users eligible to apply for a Zopa credit card, improving the financial inclusion of thousands of new customers who may have already been turned down due to thin files.
Within a week of its introduction, over 43,000 ClearScore users “saw a Zopa offer that would not have been available to them based on credit report data alone.”
Tim waterman, Commercial Director of Zopa, said:
“We are happy to be part of a group of fintechs at the forefront of innovation, bringing the benefits of Open Banking to millions of new customers. We already use Open Banking verification to facilitate application journeys and to power tools like Borrowing Power that help our clients improve their financial health.
“By using Open Banking to calculate credit eligibility for the first time, we’re helping thousands more customers access our award-winning credit products in ways they may not have been eligible for before. We believe this further supports our vision of building the best place for money in the UK. “
The full report is available here.
At present, Zopa serves around half a million customers. Since receiving its full banking license in June of last year, the Fintech company has attracted more than £ 600million in customer deposits for its fixed-term savings accounts, “issued 130,000 of its British Bank Award winning credit cards and became one of the top 10 credit cards. transmitter. It currently approves 15,000 new credit cards each month.
Survey methodology: Zopa “interviewed 2000 members of the general public through Census at scale between 13.05.21 – 17.05.21 and 27.08.21 – 31.08.21.
According to ONS dataset: Persons “By single year of age and sex for UK local authorities, mid 2020 there are currently 52,890,044 adults in the UK.”
TrueLayer predicts that by 2023, “60% of the UK adult population will have used open banking services at least once would be: 31,734,026”. On this basis, by 2025, Zopa “estimates that 40 million consumers will have tried Open Banking at least”.