Open banking is vital to lending within the pandemic environment, according to Equifax.
Equifax is calling for lenders to further embrace the rising tide of technological progress.
AccountScore, an Equifax company, revealed that it has seen a 140% surge in the adoption of open banking across the board.
Emma Steeley, chief executive of AccountScore, said: “Facing an unprecedented challenge, commercial and consumer lenders have accelerated their digital transformation, embracing open banking.
“This is allowing credit providers to make more informed and timely decisions utilising real-time current account data, and ultimately helping thousands of businesses and individuals access billions of pounds of credit at a time of critical need.
“With income shocks, rising unemployment and personal debt forecasted as government support unwinds, the financial landscape for consumers and businesses remains uncertain.”
As a result, Steeley believes that open banking will have a vital role to play in this volatile environment by assessing true affordability at the point of credit application.
Additionally, Steeley noted that open banking will assist in identifying when consumers are becoming more financially vulnerable and fast tracking tailored support to get to the right outcome
Dan Weaver, open banking expert at Equifax UK believes that lenders “must harness this moment of transformative change, and not let inertia stifle innovation”.
He added: “Take mortgage applications for example, real-time digital access to bank account information can be used to support ID verification, and provide an enhanced view of credit risk.
“This process, through in-depth categorisation, can incorporate rental and other important payments to understand complex income cases and provide a more accurate view of affordability than the statistical survey averages typically used today.
“The mortgage market is extremely complex, but through wholesale collaboration with fintechs, brokers and lenders, open banking solutions can fully digitise applications – dramatically streamlining the process while making it safer, fairer, quicker and less susceptible to fraud.”