A quarter of UK lenders now use Open Banking technology, with half of those that don't planning to do so in the future, according to research from Credit Kudos.
Nearly nine in ten of 102 lenders surveyed say they plan to adopt it within the next two years, meaning that by 2023, seven in ten lenders overall are expected to be using Open Banking.
Credit Kudos says that this enthusiasm for Open Banking is in large part due to the pandemic, which has significantly affected lenders' ability to operate as normal and highlighted the value of accessing extra data.
Around eight in ten lenders changed their rules about who they could lend to in the pandemic. Almost half of these changed their policies because it was too difficult to verify borrowers’ income, for reasons including furlough and redundancies.
With 11.7 million people furloughed at some point during the pandemic, and unemployment at 5.2% in Q4 2020, more than a third of lenders changed their lending rules in order to avoid those deemed ‘higher risk’ customers during a period of huge uncertainty.
This meant that lenders were missing out on new business, with 30% of those who changed lending policies during Covid-19 experiencing a loss of revenue from new customers.
A third of lenders that changed their policies during the pandemic saw a knock-on effect in the form of an increased need to adopt new technologies across their business, and 30% saw an increased need for new data sources.
Nearly half of all lenders surveyed believe that Open Banking could help their organisation save time and cut the cost of credit decisioning in the future.
Fred Kelly, CEO, Credit Kudos, says: "The seismic shock of the pandemic has forced a period of refocusing among lenders on the need for better sources of data, and greater technology integration to help them leverage newer data to enable better decisioning.
"Open Banking technology is helping lenders to move beyond the limitations of traditional credit data and open the door to better financial behavioural data, all of which creates more rounded assessments, increased acceptances and reduced defaults."