As of 13th January 2018, the UK’s nine largest banks have given licensed competitors access to their customers’ financial data. Known as Open Banking, an initiative led by the Competition and Markets Authority, this new system enables banks, financial providers and brokers to create application programming interfaces (APIs) to share data between them. The top nine UK banks are involved – Lloyds, HSBC, Barclays, Danske Bank, Bank or Ireland, Allied Irish Bank, Santander, Nationwide and RBS. However, it is expected that in time all major retail financial service providers will take part.
The idea is that your financial products and data can be viewed in one place through a digital app, giving better insight into spending patterns, integrating broker comparison tools and making it easier for lenders to see what kind of financial service you can be offered and at what rate. This should result in more competition within the banking sector and future savings for customers.
How Will Landlords Benefit?
Landlords are looking for fast and cheaper funding solutions given the recent rise in interest rates, so the fact that mortgage lenders and brokers can now talk to each other by sharing customer data is a welcome move.
Providing the customer gives their consent, the application process for a mortgage could become a lot easier. Mortgage lenders will be able to see information on a landlord’s property portfolio along with their financial status like credit cards and other mortgages through digital information on an app. This will speed up the procedure of getting a mortgage or other financial service by removing the need for landlords to provide endless documentation, meaning they can be assessed more quickly and fairly.
Easier to Shop Around
According to the Telegraph, Open Banking will also provide an easy way for landlords to shop around for other financial services like rent guarantee insurance, property inventory software, such as that found at https://inventorybase.co.uk/, and accounting services. This is because Open Banking will combine with broking platforms by using a customer’s financial data to come up with the best personal financial services based on their current position, earnings and expenditure – a much faster way of achieving an outcome than using Excel spreadsheets to reach the same results.
It looks like shopping around for a mortgage is about to get a lot easier.