The value of Open Finance is becoming clearer as an increasing number of start-ups and established players are innovating in the ecosystem. From tax filing to subscription management, mortgages and credit risk, this article will run through some of the most impactful and interesting Open Finance use cases.
While nobody enjoys filing their taxes, Open Finance is set to take out a lot of the stress from this mundane task. With schemes like Making Tax Digital (MTD) from HMRC fully rolling out next year, software firms can use this opportunity to automate elements of these tax returns through AI and machine learning.
Open Finance data, intelligence and payments platform Moneyhub have already launched an API that allows landlords to quickly categorise transactions and, in the process, significantly reduce the time it takes to complete the HMRC Self-Assessment UK property form. Utilising automation technologies and Open Finance to address such a time-consuming and tedious task that millions of people in the UK undertake each year will enable businesses to spend more time on essential work.
The continuous shift to digital services has led to the rise of countless subscription services. From Netflix and Spotify to food delivery and gym memberships, it’s not hard to see how these services can quickly build up, with the average European spending £301 a month on 11 subscriptions, according to subscription management software tool Minna Technologies.
Losing track of how many subscriptions you hold across dozens of different accounts is easy. Firms like Minna enable customers to manage subscription services via their bank’s app and if they see a subscription they want to cancel, it can be removed at the touch of a button. Free trials can also be viewed and canceled before a charge is placed, all within the banking app.
Mortgages and rentals
There’s been little innovation in the process of renting or buying a house in recent years. Despite the spread of digitisation in virtually every industry, house buyers today still need to manually collect dozens of often obscure documents to send to their bank. Delays and major stresses during these transactions are extremely common and make an already complex process even more challenging.
Traditional ways of manually sorting through documents during the mortgage application process are becoming increasing ineffective as start-ups like Habito are using AI and machine learning tools to simplify this process.
Now, with Open Finance, mortgage assessors can use customer data from banks to gain a clearer understanding of the financial strength of a customer and their affordability. Firms like DirectID are using bank data to do everything from verifying income to calculating affordability.
The ability of banks and financial institutions to instantaneously understand credit risk for customers was one of the first revolutions created by Open Finance. But the past year has seen a major uptick in the use of credit risk tools to provide customers with an improved and more convenient experience.
Buy now pay later providers like Afterpay and Klarna have significantly reduced the friction facing buyers at the check-out and helped increase their spending. The ability to make credit applications take seconds rather than hours or days thanks to Open Finance has also given customers the power to check their likelihood of being accepted for a loan or credit card before applying.
Join us at the Brewery on the 15 and 16 November, as FTT Open Finance 2021 returns to London and is co-located with the Fintech Talents Festival. Register now to secure your place and become part of the community that is reimagining financial services.
Witten by Finbarr Toesland, Editorial Contributor