How Technology and Open Banking can Improve Lending in the UK? – 2021 Guide
Technology is changing every aspect of our life and allows us to use features we couldn’t even imagine in the early 2000s. For example, today we can use our smartphone to pay our bills, shop online, book a flight or holiday, connect with our friends all around the world, have real-time meetings with colleagues who live in different time zones. So, it is pretty understandable that many things changed in the last decade, and that includes the concept of traditional banking and moneylending services.
But, many people are not comfortable to use open banking and similar services, because they often believe only the old and good ways of holding cash and using it for shopping and paying bills. These people are also skeptical about the concept of open banking, mostly because they are afraid of learning new things. But, as time goes by, we should adapt to new things and learn how to manage our money using the benefits of technology.
First, let’s explain and understand what is open banking and how it can help the people to successfully manage their finances, save, and pre-determine their spending routines:
What is open banking?
This service is widely accepted and adopted in the UK’s financial sector. It’s a type of service that allows the developers to create and build appropriate applications that will be used for providing different types of services in institutions. The developers should always create a safe protocol for the users, and take care that their data is safe and protected. At the same time, every transaction and finance action should be transparent, and also the client can choose what type of service they need.
In 2015, the European Parliament announced they have new rules for using new technologies in the banking services. They needed to revise the initial plan because of the unclear regulations, so they could be sure there is no chance for misuse of the data, or leaking the personal information and amount of money some people own. So, the banks and financial institutions needed to create strong policies, so the developers who need to access the data won’t use it against the rules and laws.
Using open banking, we can access our personal data and information, and even control its use outside of the institution. Every bank or institution should be transparent about possible conflicts of interest or the risks that this service may bring. But, usually, the laws are strict and there is not a lot of space for manipulations, even though there is still some possibility that the company that develops the apps is not trustworthy or legit. That’s why every country needs to adopt new regulations, so they can protect the bank customers and their personal information, including the amount of money they own, or even the transactions. But, the fact is that technology is changing our lives, sometimes for good, and sadly, sometimes for bad. It’s on us to embrace these changes and try to adapt to all the opportunities we have to make our life easier.
Banking services and technology
First, we had raw cash and manual banking services, like putting some amount in saving funds while waiting in the queue for hours. Later, they invented the checks for cashless transactions between two persons or company and employee. When the cards came, they caused a real revolution in the financial sector. People were finally able to receive their salaries in a more safe way than putting cash in an envelope. They only need to have their credit or debit card to pay in different stores or withdraw cash from an ATM. E-banking services were also a big step for this sector because people could check how much money they have, make transactions, and manage the currencies, or even set limits.
After that, many services offered an option for online payment, including water, gas, and electricity providers. Today, we only need to own a smartphone and download the app from the store and choose almost every action that can come to your mind, like paying bills, sharing a bill with your friend, or manage your spending effectively.
When it comes to loans and credits, every day there are more and more online services that allow you to borrow some amount of money, following some simple rules and conditions, if you need them immediately. Some of these services can request entering some basic data, so they can charge you the amount you need to pay back, so you can be sure you won’t be late. In some way, you are using the concept of open banking and allow someone to access your data and automatically charge the amount you owe, so you can avoid paying high fees for late payments.
Instant credit services like CashFlex also offer you to choose how much money you need, and how much time do you need to get them back to the loaner. You won’t need to fill up different documents. These services, thanks to open banking, can help you make smart decisions, check your credit score and eligibility, and ensuring you a safe and protected process of applying. After your request is approved, you will receive the money by the end of the day. Many people find these services disturbing and not safe, because of the fees and the access they have to their accounts. Most of the fast loans are trustworthy and safe to use, but you should always check the verdict before choosing this type of service.
Short term loans are good because you can’t borrow a lot of money, like thousands of Pounds. Most of the time you can’t borrow more than 5,000 British Pounds, so according to your credit score, you will get a few automatically tailored options, or you can choose how much money do you need. You only need to fill up the forms and send them and wait for your money.
All of these things are making the money loan easier for the users, and that’s what they really need – easy and efficient service they are able to get in 2021, thanking the technology growth and improvement.