As the world moves towards an ever more connected digital banking system, open banking has become one of the most secure and transparent ways to access financial data.
This has not only helped improve efficiency across a wide range of financial systems but has significantly helped ensure transparency in the lending sector.
For borrowers, it has made the process of getting a loan more streamlined and secure, whilst allowing lenders secure access to a borrower’s financial information, giving more flexibility to provide the most suitable offers.
In this article, we discuss the top benefits of open banking when applying for a loan in the UK.
Let’s get started.
1. Streamlined Application Process
The introduction of open banking is a significant step in streamlining the loan application process. Traditionally, submitting a loan application involved the long process of gathering documents which were then reviewed and verified, taking a long time for loan disbursal.
Now, with open banking, lenders have much quicker, consent-based access to financial documents. This not only makes the process safer but also more accurate.
Moreover, the efficiency of open banking reduces the loan application and disbursal process from weeks to hours, making the borrowing process much smoother.
2. More Personalised Loan Offers
The benefits of open banking don’t stop at streamlining the application process. They also allow for a greater level of personalisation with your loan terms, borrowing amount and interest rates.
With a comprehensive understanding of the borrower’s financial situation, lenders can customise their loan offers for specific situations. This opens up much better opportunities for both borrowers and lenders, moving away from the traditional and quantitative credit score system.
As a result, one of the biggest benefits of open banking for customers is the increased level of personalisation it offers. From custom loan amounts to flexible repayment plans, open banking helps people access what they need, when they need it.
3. Faster Loan Approval Times
One crucial benefit of open banking is the facilitation of a quicker loan approval process.
Traditionally, the greatest bottleneck in a loan application is the approval process. This is because of the amount of manual processes which leads to slow verification of the applicant’s documents.
However, with open banking, lenders get access to real-time, verified data that allows for a much faster process. This is a significant benefit for those borrowers who require funds on an urgent basis.
4. Improved Financial Security
Without fully understanding open banking and using it as it should be used, you may be wondering “Is open banking safe?”. As long as you keep your details secure, it is in fact a safe and extremely reliable way of sharing certain financial information with your bank.
With an offline loan application, your physical financial documents are taken to your loan provider’s office, where anyone could potentially have access.
Moreover, now that you have submitted your crucial documents, they stay in their database forever, until they decide to discard them. However, with open banking, you have complete control over exactly who has access to your financial data, when they have access to it and for how long.
As a result, your financial information, which is stored online, is only accessible to the people you give permission to, which you can withdraw at any time. Thus, significantly improving financial security.
Choose Salad Money for Fair and Secure Personal Loans
The benefits of open banking are revolutionising personal lending with more tailored, efficient, and secure banking experiences.
That’s why, we at Salad Money leverage the open banking system to offer fair and affordable loans to you. Specially designed for working individuals struggling to get loans from traditional sources, our More Than Your Score loans are here for you when you need them most.
What’s more, as one of the largest CDFI consumer lenders in the UK, we realise that the credit score system is not an effective way to measure your creditworthiness.
We leverage our open banking based affordability assessment system to provide you with the loan you need.
Applying for one of our new loans doesn’t impact your credit score. We use Open Banking in our initial assessment. If successful, we report your loan to the CRA’s (Credit Reference Agencies). Your credit score won’t hold you back from being eligible.
To learn more about our fair and affordable personal loans, click here and to read more articles like this one, visit our blog page now!
