London, UK – In the UK, lenders are increasingly using new technologies like open banking and artificial intelligence (AI) to improve the way they assess creditworthiness. These tools help lenders make faster, more accurate, and fairer decisions about who they lend money to. This is particularly important in a time when customers expect quick decisions and more personalised services.
What Is Open Banking?
Open banking is a secure way for people to share their financial data with third-party providers, including lenders.
“With the customer’s permission, we (lenders) can access real-time information from their bank accounts,” explains the founder of The One Stop Money Shop. “This includes details about income, spending habits, direct debits, and regular bills. Unlike traditional credit scoring, which often relies on outdated or limited data, open banking gives lenders a more complete and current picture of a borrower’s financial health.”
According to the UK’s Open Banking Implementation Entity, more than 11 million open banking payments were made in July 2023 alone. This shows how quickly consumers and businesses are starting to trust and use open banking services.
How AI Supports Smarter Lending
Artificial intelligence is helping lenders process large amounts of data quickly. AI systems can analyse open banking data, along with other financial and behavioural information, to spot patterns and assess risk. This means lenders are better able to judge whether someone can repay a loan—not just based on their credit score, but on how they manage money day to day.
AI can also help identify fraud and reduce the risk of lending to someone who is over-indebted. For example, if someone is regularly going into their overdraft or missing bill payments, the AI can pick that up quickly, even if it hasn’t yet affected their credit file. This allows lenders to act responsibly and avoid giving loans to people who may struggle to repay.
Faster, Fairer Decisions
“By combining open banking and AI, many UK lenders can make faster lending decisions for fast cash loans —sometimes in minutes,” explains Dan Kettle, founder of finance startup, Pheabs.
“This is especially helpful for people who may not have a long credit history, such as young adults or those new to the UK. Instead of being judged only on past credit, lenders can see how they manage their money in real life.”
A report by PwC found that 74% of UK financial institutions believe AI will be key to improving the quality and fairness of credit decisions. This shows a strong commitment to using technology to create better outcomes for both lenders and borrowers.
The Future of Lending
As more people become comfortable with sharing their data through open banking, and as AI becomes more advanced, lending decisions are likely to keep improving. This means fewer people will be unfairly turned down for credit, and more lenders can reduce the risk of bad debts.
Overall, the use of open banking and AI is making the UK lending market more efficient, more inclusive, and more tailored to individual financial behaviour. It’s a step towards a smarter, more responsible financial system.
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Dana Leigh
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