What Is Open Banking?
Open Banking is the result of new rules that asked UK-regulated banks to easily and readily be able to share the transactional data of its customers.
Basically, banks have to be able to share the data to allow their customers to make more informed and better decisions about their finances. Although, it is entirely up to the customer whether their data is shared or not. Your bank cannot share your information without your permission.
The idea of the financial reform is to inspire competition and innovation in the FinTech sector. Since the rise of Open Banking, many financial apps and fintech companies have used the data to build apps to help customers manage their money more effectively.
For us, Open Banking gives us the ability to make better decisions about your financial well-being.
Why Do We Use Open Banking?
Financial well-being is at the heart of what we do.
We offer low-interest unsecured loans to ease debt repayments, emergency expenses or big expenditures - such as weddings. We are able to offer low interest rates because we are an online peer-to-peer platform, so we cut out the costs of the middle man.
Because of the low-interest rates, refinancing with or borrowing a Leap Loan can improve financial wellbeing as it is the cheapest option. But to make sure that we are fair, and the loans we offer do not negatively impact a borrower’s finances, we use OpenBanking.
Using OpenBanking benefits us (and our customers) in two ways;
OpenBanking allows us to fully understand the finances of all our customers - their transactional data, their debts, their income and spending patterns. As OpenBanking gives us a wider financial picture to work with, we are able to make sure the loans we offer and approve are 100% affordable.
As well as benefiting our borrowers by protecting them from further debt or financial pressure, we lessen the amount of risk taken which in turn protects the investments of lenders.
Lenders will feel more secure knowing that we have thoroughly vetted all borrowers to minimise the risk of default.
Essentially, by using OpenBanking we are able to protect both our borrowers and lenders in order to build a community where everyone can thrive.
How Do You Connect To Open Banking?
At Leap, we’ve partnered with AccountScore to use OpenBanking in our affordability and credit-worthiness checks.
By using AccountScore to see your financial history, we’re able to make considered decisions to make sure that your loan will only improve your quality of life.
When you go through the process of accepting a quote with Leap, you will be asked to connect your bank account through AccountScore. Of course, it is your choice to share your data, but we will be unable to approve a loan without assessing your finances through OpenBanking first.
You have to connect to OpenBanking through AccountScore in order to progress with your loan application.