Open banking is a relatively new concept for consumers and lenders alike.  Simply put, open banking is a method by which consumers can safely share their financial data with lenders.  Securely accessing this real-time banking data provides a multitude of benefits and options in subprime motor financing.  In the lending world stability, ability to pay and willingness to pay are what factor into the likelihood of securing financing.  Traditional credit score models are only one way these factors are evaluated.  This blog will examine the benefits of using alternative data from open banking methods for both lenders and consumers.

Stability typically looks at employment or earning history and opportunity.  Ability to pay investigates debt-to-income ratios and how income is earned.  Willingness to pay is where credit reports are used to analyze risk and likelihood to pay back what is borrowed.

Complete Picture of Financial Health

Alternative data provides an opportunity for consumers not to be constrained by their credit score. With the ability to build a complete 360 perspective of a consumer’s financial health in seconds, those who may otherwise be denied by a credit score can have options.  Additionally, having rich data insight into banking data assists with affordability checks alongside creditworthiness.  Being able to supplement traditional credit decisioning models with real-time income data gives a more accurate depiction of the consumer’s financial health.

Bank Connect, through cyclCRM, provides valuable insight into a borrower’s health and creditworthiness.  Seamlessly and securely providing live banking data like:

  • Age of account
  • Current balance
  • Balance 90 days ago
  • Balance on payday
  • Balance the day after payday
  • Balance trends
  • Incomes/Expenses
  • NSFs in the last 12 months

Improve Customer Satisfaction

Furthermore, this secure, digital solution to acquiring banking data means closing deals is easier than ever.  A consumer who decides to go car shopping off the street can provide immediate access to their bank right from their phone.  Low friction solutions like this provide a rich digital experience and cut down on processing time. The journey to sale is streamlined with this paperless, online approach and meets customer expectations.

Confident Decisioning

Unfortunately, subprime motor financing is plagued by repayment issues and fraudulent applications.  Lenders can reduce risk by obtaining real-time data to avoid employment and income falsifications.  Bank Connect makes it possible to verify employment and cash flow immediately instead of relying on traditional methods. Another benefit is a reduction in calls and manual time spent assessing income and expenditure.  With instant access to this data, there is a notable decrease in processing time and more certainty in success of loans.

Open banking allows customers to securely give lenders insight into their financial health.  This expedites traditionally cumbersome lending practices and provides a fuller picture than the credit score alone. Lenders can confidently decision applications, avoid lost sales, streamline their processes, and improve customer satisfaction using open banking tools.