As the cost-of-living crisis continues to place a strain on the average UK household’s finances, many people are now finding it increasingly difficult to manage their essential bills; including energy, phone and water expenses.
Writing for Payment Expert, Tink’s UK & Ireland Banking Director, Tasha Chouhan,expressed that banking providers should answer the public’s cry for help by ensuring that they offer services like Open Banking that are personalised according to the people’s needs.
Handing financial control back to consumers
As people grapple with organising their finances to avoid missing payments, tools to help navigate the challenging period can go far. The banks recognise the appetite for providing consumer support – Tink’s recent survey revealed that 41% of banking executives believe that they have a responsibility to help consumers through the cost-of-living crisis.
However, just over a quarter of consumers surveyed actually feel that they are receiving tailored support from their bank with many sharing that their bank has never contacted them on their financial situation, showing a disconnect between banks and their customers.
Data-driven technology is enabling the level of financial support customers want from banks, and revolutionising financial management as we know it. By unlocking additional insights through Open Banking tools, banks can increase consumers’ visibility to help them track their spending habits more closely.
Access to data from all your financial accounts coupled with features such as subscription management services, or recommendations on how to maximise rewards programmes, give consumers a holistic overview of their finances to help identify where cutbacks could be made.
Having access to a spending breakdown like this could potentially help people stretch their cash further without having to turn to savings or using lines of credit to pay for household essentials.
Features like these are naturally attractive to consumers, with 31% of Brits surveyed by Tink saying that they’d like access to budget management tools to get a clearer overview of their finances. By supplying this layer of personalised support, banks can ensure that they are serving their customer base in the best way possible.
Creating a holistic snapshot
As well as helping people understand their own finances better, Open Banking also helps provide banks and lenders with a more accurate picture of a customer’s financial circumstances.
With mortgage rates at their highest level for 15 years and Which?’s research showing one in 20 renters and one in 30 mortgage holders defaulting on a payment, it is vital that banks can offer customers affordable products which suit their financial situation.
Using real-time data, Open Banking helps provide lenders with data-driven, real-time insights that paint an accurate, holistic and up-to-date picture of a borrower’s finances. This overview enables credit to be tailored in line with an applicant’s financial health, while also streamlining the application process by securely facilitating credit decisions in minutes, rather than days.
Whilst there is no quick fix to the burden of heightened interest rates and record breaking inflation, this can offer some help and control over the situation at a stressful time.
Adopting Open Banking assists consumers, banks, and lenders alike by enabling processes that support a helpful credit and financial management ecosystem. As an industry we must continue to invest in technology to help people manage their finances.
Customers will value the banks and businesses which go the extra mile to support them now while times are tough, and reward them with their custom when circumstances improve.