How Open Finance is revolutionising lending
Season 3, episode 9
Listen to the full episode here.
Lending money is a process that has long been around and for many years it was left undisrupted. People are very familiar now with credit scores and the idea that to get credit you need credit.
New solutions and technologies are coming to disrupt this market to make financial products more accessible to a greater number of people.
In this episode we’ll look at how Open Finance is changing the status quo and look at some fantastic examples of fintech innovation.
We’ll also look at how credit bureaus are adapting and partnering with fintechs to evolve their own models.
Guests:
Robert McKechnie – Head of Products at Equifax
Crawford Taylor – CEO and Founder at Nude
DirectID and Zinia AI partner to assist with regulatory compliance in lending
The collaboration between DirectID and Zinia AI propels lenders towards an unprecedented realm, where flawless compliance and unrivaled personalisation coexist seamlessly.
In the rapidly evolving digital landscape of today, discerning customers yearn for bespoke financial encounters tailored precisely to their distinct requirements. Through DirectID’s cutting-edge open banking service, lenders gain direct access to real-time financial data, emboldening them to truly apprehend their customers’ financial patterns, inclinations, and capabilities. This wealth of information serves as the bedrock for lending decisions that transcend boundaries, ushering in an era of hyper-personalized experiences that foster unparalleled satisfaction and unwavering loyalty.
Armed with Zinia’s visionary decisioning algorithms, lenders can automate, refine, and imbue hyper-personalised journeys within the lending process, birthing superlative outcomes that captivate customers. Zinia’s formidable technology empowers lenders to make precise, consistent, and equitable lending determinations, taking into account an expansive array of factors, encompassing affordability, risk tolerance, and suitability.
In an era of transformative shifts in consumer obligations within the lending industry, the alliance between DirectID and Zinia emerges as a paradigm-shifting game-changer. Together, we embrace the opportunity to shape the future of lending, equipping lenders with the ability to deliver unparalleled personalisation on a grand scale, surpassing even the loftiest of regulatory benchmarks.
If you are a lender driven to carve your own distinct identity in the market and surge ahead of the competition, we implore you to embark upon an exploration of the profound possibilities that lie within the DirectID-Zinia AI partnership. Connect with us today to unlock a treasure trove of insights into how we can empower you to drive hyper-personalised outcomes that will leave an indelible mark.
Standards for Innovation: Mapping the global financial landscape in Open Banking
The expansion of Open Banking across the globe has led to a burst of innovation within financial products, leading to improved customer money management where consumers give access, and consent to their data being used. The opportunities to transform the economy and society are even greater with more countries embracing Open Finance and putting in place a secure data-sharing infrastructure across multiple industries and not just banking.
With Open Banking initiatives gaining momentum around the world, a range of different standards are emerging. Smart Data Foundry and Ozone API have collaborated to develop the Standards Library and Innovation Atlas, outlining the features and similarities between different standards being set across the globe. Beyond a general desire to drive innovative outcomes, not all standards are designed with the same intentions in mind. As nations look to allow API access to customer-consented data, it’s clear that the main drivers may differ, from competition and inclusion to stability or innovation.
For the UK, with its ground-breaking Open Banking Standard, increasing competition was key. The Competition and Markets Authority’s (CMA) 2016 report found that big banks dominated the market and wanted consumers to benefit from introducing other players. Has the mandating of Open Banking worked to achieve this in the UK? The FCA reported in 2022 that large banks’ historic advantages were starting to weaken, in part due to digital innovation.
As well as increasing competition, Open Banking’s other advantages are consumer based- such as increasing the ease of charitable spending and financial decision-making.
So how do the main objectives of other standards vary?
Countries with financial inclusion in mind in their Open Banking regimes, such as Brazil, Mexico or Indonesia, look to embrace a broader scope of data exchange and invite new participants into the regime to ensure a greater diversity of products and services for the financially vulnerable.
From the outset, Banco Central do Brasil’s goals aimed for a more inclusive and competitive business environment’, highlighting the promotion of financial citizenship as one of their four objectives. Also listed were encouraging innovation, promoting competition and increasing the efficiency of the National Financial System and the Brazilian Payment System. From the outset, a broad range of products were included in their standards to tackle these objectives.
The Open Banking move for India was part of a bigger infrastructure build called India Stack, encapsulating a digital identity infrastructure, a digital documents system, a payments system (UPI) and the account aggregator framework. This was part of a massive digital overhaul of the management of the economy, with paperwork dominant, to address financial inclusion. Cross-border interoperability, particularly for remittance payments, is another target being addressed by the nation.
Financial access is a top priority in Mexico for the government, whose Fintech Law was enacted in 2018. However, regulated Open Banking is not yet a reality, but with a FinTech ecosystem growing rapidly and it being a hotbed of software engineering talent, Mexico will be one to watch when Open Banking does come into force.
Finally, in the Kingdom of Saudi Arabia, Open Banking has been driven as a pillar of the ambitious vision for Saudi 2030. Open Banking and Open Finance are key enablers in transforming the financial services sector, economy, and society.
As Open Banking standard frameworks are developed globally, it allows for innovative products to spread across borders. Smart Data Foundry’s aizle synthetic data engine looks to drive innovation and produces Open Banking compliant synthetic data. Ozone API provides compliant open API technology to monetize Open Banking globally. The global environment for applying APIs and synthetic data can be understood with Standards for Innovation.
Learn more about the global financial landscape by exploring Smart Data Foundry’s”¯Standards for Innovation.
Written by Magdalena Getler and Lucy Lloyd (Smart Data Foundry), Huw Davies, Chris Michael (Ozone API)
DirectID and Smoothpay to provide stable income to freelancers
Scottish fintech, DirectID, the global credit and risk platform, has recently formed a strategic partnership with Smoothpay, a fintech startup that converts unpredictable income into a dependable paycheck. By leveraging DirectID’s open banking platform, Smoothpay will now offer freelancers, contractors, and small business owners a reliable monthly income.
Smoothpay’s solution aims to remove the anxiety associated with erratic pay schedules, enabling people to pursue the flexible work they desire. By utilising real-time and historical income data through open banking, Smoothpay guarantees gig economy workers a level of certainty, ensuring a consistent income stream.
DirectID’s income verification tool, powered by open banking, is utilised to evaluate the earnings of small business owners and freelancers. Once users undergo a quick 30-second connectivity process, Smoothpay can rapidly analyse up to a year’s worth of customer earnings. As a result, individuals can promptly sign up for the service and start receiving their “Smoothpay” without any delay.
Henry Oakes, Founder of Smoothpay, said:
Reliable income analysis is at the heart of Smoothpay, but so too is a smooth (ahem) and trustworthy customer experience. We wanted our customers to find out their Smoothpay within a minute or so of signing up – and we’ve managed to achieve this with minimal fuss by integrating DirectID into the app.
Clare McCaffery, Chief Commercial Officer, DirectID, said:
When I first heard about Smoothpay, I instantly understood the role open banking could play in helping freelancers earn a stable income. Our mission has always been to promote financial inclusion ”“ that means to help people access the products they need, and help the providers to provide them. The world of work has transformed in recent years, and this is an incredible opportunity to use open banking to support those without a traditional salary for the first time.
UK Fintech Week special – a chat on synthetic data with Smart Data Foundry
Season 3, episode 6
Listen to the full episode here.
In this special episode with speak with David Tracy, Head of Data Science, at Smart Data Foundry on the week they presented their new Aisle proposition at Innovate Finance Global Summit.
What is synthetic data is? How is it different from real-world data?
We’ll explore how it will speed up innovation and collaboration in the fintech world, what the risks and benefits are and much more.
David will also speak to us about the work they’ve done with the FCA and the PSR to tackle APP fraud using Agent Based Simulation.
Fintechs DirectID and Faciit partner to make accessing credit easier
DirectID, the global credit and risk platform for risk managers, has announced a partnership with Faciit, an alternative lending solution for individuals without a UK credit history. This partnership utilises DirectID’s open banking insights to assist people with new-to-country status in accessing affordable credit.
Faciit’s save-to-borrow solution operates by requiring users to save one-third of their loan requirements for a minimum of three months. Following this, Faciit provides the remaining two-thirds as competitive loans. Faciit distinguishes itself from traditional lenders by not relying solely on bureau data to make credit decisions. Instead, the company employs DirectID’s income verification, using open banking data to determine whether an individual can afford to repay the loan.
James Varga, CEO & Founder of DirectID, said:
We’re delighted to partner with Faciit to help new-to-country individuals access affordable credit using DirectID’s open banking-powered insights. The partnership is perfectly placed alongside our mission to promote financial inclusion and responsible lending practices. By using open banking, we can enable better access to financial services for everyone, regardless of their credit history or financial status.
The partnership between DirectID and Faciit is rooted in their shared mission to promote financial inclusion. Faciit aims to provide new-to-country status individuals with the loans they need to achieve their financial goals, while DirectID believes everyone should have access to the financial services they need.
Olaolu Olaleye, CEO & Founder of Faciit said:
Our name Faciit means we facilitate it, and it sums up our mission to help create financial possibilities for those who will struggle otherwise. We are excited to partner with DirectID to deliver our complimentary missions of enabling financial inclusion.
ZavFit
New solution for Pensions Dashboards onboarding
A consortium of four leading technology providers has joined forces to offer a comprehensive end-to-end solution for pension providers seeking to integrate into the UK pensions dashboards ecosystem.
The collaboration between Target Professional Services, mypensionID, Bravura, and Delta Financial Systems is designed to simplify the complex processes and regulatory requirements that providers face when connecting to the ecosystem.
Each firm specialises in a particular area of expertise to ensure a seamless journey toward dashboard readiness before the staging deadline. Target Professional Services uses its leading tracing capabilities to screen and cleanse member data while mypensionID verifies and traces individual members using a verification app tailored to the pensions industry.
Bravura and Delta then provide a jointly developed cloud-hosted Integrated Service Provider (ISP) solution for providers’ data, with a focus on configurability and compliance with the Pensions Dashboards Programme’s (PDP) Code of Connection. The four firms’ technical expertise and market knowledge combine to create a unique solution capable of addressing pensions providers’ urgent and specific needs.
Jonathan Hawkins, Principal Consultant & Pensions Specialist at Bravura, said:
“Delta, mypensionID and Target’s deep expertise and technical know-how in the pensions and data sectors, combined with our ability to process huge volumes of assets and trades on our systems, brings a level of reliability and scalability that pensions providers require right now.
“Pensions dashboards are a crucial step towards modernising and digitising the UK’s pensions sector and, with the clock ticking, pensions providers up and down the country need tech partners with proven scale and expertise. This unique collaboration delivers that solution.”
Photo by Andrea Piacquadio: https://www.pexels.com/photo/young-woman-helping-senior-man-with-payment-on-internet-using-laptop-3823488/
Inbest and MaPS launch New benefits calculator
In collaboration with Scottish fintech firm Inbest, the Money and Pensions Service (MaPS) has introduced a benefits calculator.
The tool, which is free of charge, will be integrated into the MoneyHelper website of MaPS to assist individuals in determining the benefits and social tariffs for which they may be eligible.
Entitledto.co.uk claims that there may be billions of pounds in unclaimed benefits across the United Kingdom. By entering their basic information, users will be able to conduct a quick search and receive results in less than a minute.
The calculator will then request that they complete a more detailed search to verify their eligibility for any potential claims. MaPS emphasizes the importance of identifying other sources of income and any available assistance to help individuals manage their money and pensions, given the rising cost of living.
This initiative was launched after MaPS launched a new campaign in the previous month to increase awareness of the free help and advice available.
Michael Royce, Senior Policy and Propositions Manager at the Money and Pensions Service, said:
“The most common reasons why so much goes unclaimed in benefits is that people are unaware of what they’re entitled to or assume that they aren’t eligible.
“We look forward to working closely with Inbest and hope that making their benefits calculator available through our MoneyHelper website helps millions of households who are currently missing out to maximise their income.”
Manu Peleteiro, founder and CEO at Inbest, said:
“We are thrilled to partner with MaPS and power their MoneyHelper benefits calculator. Working with MaPS colleagues is a fantastic learning experience, and their input is crucial to continuously improve our calculator and shape our product roadmap.
“We are looking forward to working with MaPS and contributing to the delivery of the UK’s Strategy for Financial Wellbeing by helping people access the benefits, grants and social tariffs they are eligible for.”
€9m Investment by Ingka into Scottish fintech DirectID
DirectID, one of the leading fintech in Scotland, that specialises in credit risk assessment, risk analytics and predictive modelling, has announced that it has received a minority investment of €9m from Ingka Investments, the investment division of Ingka Group.
DirectID’s main objective is to promote financial inclusion worldwide through its global credit risk score, by providing advanced data to optimise credit and risk decisions in an increasing number of countries. The company provides risk managers with a real-time dataset that can drive efficiency, improve decisions and lifetime value across the credit lifecycle. DirectID’s insights enable decision makers to assess risk better, regardless of age, location, and past credit performance.
James Varga, CEOand Founder of DirectID, said:
“We’re proud to join Ingka Investments’ portfolio of market-leading firms. We are excited to be shaping a new global standard in credit scoring that enhances people’s lives by enabling access to products they need in an affordable way. Our coverage, advanced insights and predictive models provide a unique opportunity to achieve this by creating the world’s first real-time, inclusive, credit score based on open finance data.”
The funding received will help expedite the launch of DirectID’s most advanced predictive models for credit and risk, built from open banking data. Additionally, the company plans to expand its credit risk offering into new markets and accelerate the development of models for each stage of the credit lifecycle, from originations through portfolio management to collections.
Peter van der Poel, Managing Director of Ingka Investments, said:
“We are pleased to have made this investment in DirectID and are confident of their continued growth in the open banking market. They have developed an innovative solution with the potential to complement and disrupt the traditional credit and risk market and help drive financial inclusion for more people. Open Banking-enabled credit and risk insights is an area we believe can add value to Ingka’s financial services proposition in the future.”
This investment is just the latest in a series of investments made by Ingka Investments, which aims to strengthen Ingka Group’s core retail business by investing in innovative companies in areas such as digitalisation, customer fulfilment, fintech and sustainability. These investments support the ongoing transformation of Ingka Group to become more affordable, accessible, and sustainable.