5 Benefits of Open Banking for Loan Applications

Share Article

Facebook LinkedIn

Author

LinkedIn
5 Benefits of Open Banking for Loan Applications; two women looking at phone

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 a leading online lender 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 regardless, of your credit score.

As an FCA-approved lender, you can rest assured knowing that your financial well being and data is safe with us.

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!

Recent Insights
woman looking at the importance of financial inclusion
Why Financial Inclusion is Essential in the UK

Financial inclusion means making sure that everyone has access to essential financial services, such as bank accounts, credit, savings, and insurance, regardless of their income or background.

Read More about Why Financial Inclusion is Essential in the UK Go
A lady looking at her phone smiling
How the Global Energy Crisis is Impacting Households

As a result of a number of geopolitical and economic factors, the global energy crisis is affecting many countries across the world.

Read More about How the Global Energy Crisis is Impacting Households Go
5 Effective Ways To Improve Your Financial Health; happy family
5 Effective Ways To Improve Your Financial Health

Financial health is a vital aspect of living a happy, stress-free life. It’s a measure of your financial situation and encompasses all aspects of your finances, from your earnings and assets to debts.

Read More about 5 Effective Ways To Improve Your Financial Health Go
The Ultimate Guide to Understanding Credit Card Debt; man smiling at laptop
The Ultimate Guide to Understanding Credit Card Debt

Whether you’re making in-store purchases or ordering online, credit cards are most people’s go-to way of paying.

Read More about The Ultimate Guide to Understanding Credit Card Debt Go