CFIT’s report on Khalifa Review shows how better data-sharing in the context of Open Finance can provide improved access to credit for companies and swifter, more effective financial advice for consumers.
Alongside a strategy for the future of Open Finance, which allows consumers and SMEs to access and share a wider range of their financial data, CFIT now publishes two ‘proofs of concept’ developed by the coalition that show the full potential of this technology.
The first proof of concept is a dashboard produced with Citizens Advice, which has shown how enhanced data-sharing could provide tailored financial advice to 40% more consumers facing financial difficulties and distress – supporting an extra 150,000 people annually. This sets out how Citizens Advice clients could choose to seamlessly share financial data with the charity, freeing advisors from lengthy data collection and analysis, and giving them more time to offer advice.
The second successful pilot analysis with HSBC UK showed that Open Finance could deliver more lending to SMEs. It demonstrated that accessing new datasets and auto-populating business loan applications can lead to a significant boost in lending decisions. The exercise suggested that over a quarter of businesses in a sample of SMEs whose loan applications had been referred for manual underwriting, and who risked missing out on credit, could be given access to finance, had Open Finance been in place. The work – which used synthetic data and profiles of SMEs based on HSBC business customers – also showed that embracing Open Finance could lead to a fall in the number of businesses that give up on applications before they are complete.
Other recommendations within the Coalition’s report include:
Setting up a taskforce to build on the Coalition’s work in prioritising other ways that Open Finance can deliver better outcomes for businesses and consumers beyond credit. Other potential use cases identified include retirement and pensions, savings and investments, Digital ID and cash flow management;
The development of a viable commercial model to incentivise businesses to securely share financial data, echoing JROC’s work on design principles for a future entity and the recently published Future of Payments Review.
CFIT executives highlighted the significant benefits of Open Finance, including increased financial control for consumers and SMEs, global growth opportunities for the fintech sector, and alignment with the UK government's Smart Data economy goals. They thanked coalition partners for their work and expressed readiness to collaborate further on scaling proofs of concept and establishing a framework for secure data-sharing.
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