Nov 30, 2020: Open Banking Credit Checks w/ Freedom Finance

Written by Gertjan De Wilde

Thank you so much for your ongoing support! Please see below for your weekly update. As part of our passion to continue providing you with industry-leading information on the Open Banking Segment globally. This update will have the weekly additions to the Open Banking Tracker (Banks, APIs, TPPs, etc.), and an interesting new use cases for Open Banking!

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Our Current Coverage

  • We track 551 banks providing open banking services! (+8 from last week!)
  • 981 APIs currently tracked on our platform!
  • 380 TPPs in the ecosystem!
  • 81 Global markets covered!
  • 24 API Aggregators!
  • Track over 60+ data points for all open banking projects!
  • And we are growing on a continuous basis...πŸš€πŸš€πŸš€

Weekly Developments (Nov 16th to Nov 23rd):

We initiated coverage and provided open banking information for:

Open Banking Use Case Spotlight: Open Banking Credit Checks w/ Freedom Finance

We all know in 2016, the UK CMA noticed the problem that incumbent banks were not competing hard enough to gain customer business, as a response to that the CMA introduced open banking in order to allow newer players to enter the market. As customer data had to be shared with anyone the customer wanted to share it with. One direct disruption that occurred after the mandatory implementation, was to the credit scoring industry.

Credit Score

As exemplified by Freedom Finance, as data can now be accessed from borrowers' bank accounts it allows lending institutions to harvest tons of data and register them in their model to get a clearer image of the borrower's credit profile. More often than not, improving the credit score rather than damaging it further (consistency of rent payments, subscriptions, school fees, etc.). Freedom Finance did so, and called it their Fusion Score.

"The Fusion Score can unlock better rates or a smoother journey for those with established credit histories. For those with lower credit scores or thin credit files the inclusion of their transaction data, via open banking, can help identify and secure a reasonably priced product which ultimately improves their financial health. This is also the case for those that due to circumstances, such as a divorce, find it difficult to obtain credit as the current systems regularly excludes them."

The way the Fusion Score operates is the following...

"The Fusion Score changes the whole dynamic of applying for credit by bringing open banking technology to the top of a multi-product pre-qualification journey for the first time. As the name suggests, the score itself is a single metric which interprets a customer’s eligibility by harmonising credit data with insights extracted from their consented transaction data. The customer receives a personalised score and a transparent explanation of all the factors driving it; lenders receive an enriched application allowing them to make offers to segments which they previously could not access."

The technology is powered by London based Fintech, AccountScore

What is the general takeaway...

Credit scores are a way lenders price risk to borrowers. The issue is, historically the risk is tied to your credit cards and utility bills, which typically impact the most vulnerable of society more than any other segment. This bifurcation increases the divide in society, having a more dynamic and intimate credit scoring tool allows people's actual credit profile to be holistically viewed rather than in a black or white manner. We'd be very interested to hear what you think about the credit scoring and open banking, email us back with a response!


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Have a great week and stay safe!

The Banq team

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