What are the benefits of using Open Banking?

Open Banking makes it easier for you to access loans from credit unions. 

What is Open Banking?

Open Banking is a data sharing system allowing individuals to securely share financial information with other authorised third-party companies. This includes financial institutions such as credit unions.

Having access to your financial information (including your income and spending) using Open Banking means that credit unions can see a ‘real-time’ picture to make better loan decisions. As a result, they can ensure the loan suits your circumstances through an affordability check.

How does Open Banking work?

Open Banking works with most UK banks. Customers choose to opt in, giving you complete control. Importantly, you can withdraw consent to share financial data at any time.

When you opt into Open Banking, you’re asked to consent to your financial information being shared with another organisation, like a credit union. Once consent is given, this data will be securely shared between the bank and third party providers, like a credit union.

Why should you use Open Banking?

• Quicker decisions. By providing access to Open Banking, a credit union is more likely to have all the information it needs to make a loan decision. Credit unions using NestEgg can double their loan processing speed with Open Banking.
• Less paperwork. If you do not use Open Banking, you may have to find, print and send in paper-based bank statements.
• Higher chance of approval. If you have a lower credit score, credit unions can focus on other factors, including how you are spending your money. If you’re keeping on top of your day to day finances, then a low credit score will be less of an issue.

Is Open Banking safe?

Yes, Open Banking is considered safe. This is because Open Banking uses strong security, authentication, and encryption to protect your data. However, there can always be phishing attempts made against you.

To minimise these risks:

• Remain vigilant to emails and text messages that may look suspicious
• Only share data with authorised and regulated third parties. Search the Financial Conduct Authority register to verify regulation status
• Check the web address. Scammers often use slightly misspelt addresses or even different letters. The most commonly used character is “ɑ” to replace the letter “a”
• Keep any anti virus software updated
• Use strong passwords and authentication methods

Open Banking reduces paperwork, speeds up loan decisions, and increases your chances of loan approval. The lenders on NestEgg’s comparison site use Open Banking to make faster and fairer decisions.