The credit industry is taking an exponential leap towards delivering fairer and more efficient ways for consumers to engage with it.
In the same way that online banking changed the way most people interact with their money, this current evolution is predicated on the convergence of advancements in data, tech, regulation and the availability of funding for the UK’s thriving fintech sector.
It is a busy time and those organisations that do not evolve to fit into the changing landscape risk being left behind.
One perfect example of all these factors coming to improve things for customers is the innovation being made possible by the UK’s open banking initiative.
People have become increasingly aware of their personal credit scores thanks to a host of places offering free access.
What people, perhaps, are not so aware of is that their historical credit data alone is not enough to satisfy a card, mortgage or loan application.
The test for financial services providers will be how they combine the best elements of emerging technologies, with humans.A lot of what is required to determine whether a product is suitable can be found in an applicant’s bank account, where evidence of income is relatively easy to verify.
Those with thinner credit files or irregular incomes, such as the self-employed, people new to the UK or younger borrowers who are yet to build a comprehensive credit file, have the most to gain from open banking.
At Freedom Finance, open banking is used as a tool to complement existing practices, allowing a more comprehensive view of a borrower’s information and circumstances, that could not have been achieved through credit data alone, to present a better and broader range of personalised offers.
You only need to look at the noise made around GDPR to understand the value of data.
If anything, the barrage of emails we all received should have highlighted the importance of our information, how it is kept, stored, and what organisations are doing with it.
What we are currently experiencing with consumer-centric regulations, like open banking and the Revised Payment Service Directive, or PSD2, is an era of block consent being superseded by one of explicit individual consent.
By embracing new technologies, organisations plant the foundations for future innovations and will be able to deliver a higher degree of personalisation for each customer – using leading tools and widgets to improve the customer experience and thus making it easier for them to satisfy their borrowing needs.
In plain terms, this means clients can now choose to unlock the power of their data for their own benefit.
Data is set to work towards customers’ preferred outcomes and not to enrich those organisations with the privilege of accessing it.
Customer trust is imperative to personal finance.
It is about giving customers the tools to feel fully in control of their finances, while still providing the all-important human touch aspect.
But how do financial service providers ensure that the client is kept front and centre, amid emerging technologies?
Improved regulations, such as the Senior Managers Regime, certainly help.
As does employing someone with accountability. Chief customer officers bridge the gap between the customer, their data, and the regulatory landscape.
An increasingly tech savvy generation will demand better services that deliver the potential of the technology available.
However, human interactions will never be fully replaced.
The test for financial services providers will be how they combine the best elements of emerging technologies, with humans. For chief customer officers, it will be part of their mission.
Jake Ranson is chief customer officer at Freedom Finance
