A raft of new Open Banking apps are changing financial services for both personal and business customers and creating disruption and competition in the field.
Open Banking has empowered these new offers by establishing in legislation the requirement for big banks to share certain data with third parties where customers request it to allow them to access new services.
It is allowing new players to enter the financial services field to offer products as far reaching as tax accounting, financial product comparison services and loans.
In the UK alone, more than 2 million customers are now using Open Banking, according to Open Banking Implementation Entity (OBIE). Across Europe legislation is in place to propel it into the mainstream and the rest of the world is taking note too.
The innovation body Nesta Challenges highlighted the variety on offer in its Open 2020 initiative. We take a look at five of those it picked:
Creditspring: Repay only what you borrow loans
Creditspring promotes itself as a service that offers loans that are transparent, simple and put the customer in control.
The service requires customers to pay a monthly membership fee, which entitles them to take out a set number of on-demand short-term loans in a year and repay only what they borrow. For example, some customers may opt to be able to access two £500 loans in a year.
An added benefit, it says, is that customers build a positive credit score even when they don’t take the loans up.
It’s less expensive than some options – although it’s likely not the cheapest option for a loan.
Currensea: Low cost travel debit card
Currensea gives customers a separate debit card for their bank account to use abroad, which it says leads to savings.
Standard debit cards generally incur fees and charges for use abroad that can mount up. There are alternatives such as specific travel credit cards, but Currensea sees itself as more simple. Customers using the card will be spending directly from their standard account.
Users apply for a card and either sign up to a specific membership package to incur zero fees or use it for free and enjoy many of the same benefits.
Cleo: personal budgeting assistance
Cleo is promoted as a financially adept friend who sits in your pocket and offers quick guidance on whether a user will be able to cover the month’s financial responsibilities if they splurge on a take-out or desired item.
The idea is that users can literally ask their Cleo app: “Can I afford to spend $20 on a pizza?”. Cleo runs some quick numbers assessing bank balances and upcoming bills to offer an answer.
The app says it offers help with budgeting, to set and achieve savings goals and highlights areas that might be proving a drain on an individual’s finances by providing spending breakdowns on demand.
The deliberately ‘young’ tone of the AI interactions won’t be for everyone – and it doesn’t shy away from cursing on occasion.
Canopy: making home rental more affordable
This app aims to make it cheaper, faster and easier to rent a home, in part, by helping people to improve their credit score.
It looks to help people to avoid having to save large up front deposits and seeks to improve their credit scores whilst they are renting so that their outlook is better for the future.
For agents and landlords the aim is to wipe out the hassle and cost of tenant financial screening.
Kalgera: Protecting the vulnerable against fraud
Kalgera’s goal is to help protect vulnerable people from scams, fraud and tricksters.
The app seeks to identify financial vulnerability and trigger action when dangers arise to protect those people from scams and mis-selling.
The app was developed in association with a dementia researcher.
Open Banking has a bright future
There is clearly a lot of opportunity and innovation in the Open Banking sphere and it’s likely to be something that continues to create a buzz, generate options and provide inspiration for customers into 2021.