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How Fleximize Uses Open Banking

Open banking is a secure way for banks and financial institutions to share customer data. Here's how we're using it at Fleximize.

What is open banking?

Open Banking allows customers to share their banking data securely with third-party providers, such as alternative lenders or fintech companies. This new technology was proposed to increase competition within the financial sector, making it easier for customers to switch providers, set up multiple accounts with different banks, find better deals on products and have a clearer view of their finances.

For alternative business lenders, the improved access to customer’s financial information has resulted in significant time savings and more accurate lending decisions. This in turn has huge benefits for SMEs looking to secure fast, affordable funding. 

How does Fleximize use open banking?

In December 2020, Fleximize incorporated Open Banking technology into its lending process to better support SMEs in the UK. To do this, we’ve partnered with B2B fintech AccountScore which provides alternative lenders with access to the financial transactions of new applicants or existing customers.

Open Banking has been integrated into our application process for customers who apply directly to Fleximize, providing they give their consent. Prior to this, all applicants would need to search through bank statements and upload copies for review. Our team then manually extracts all the information needed to reach a lending decision. With Open Banking technology, applicants can now provide alternative lenders like Fleximize with immediate access to their bank records, so reviewing applications is much simpler.

Fleximize also uses Open Banking technology after the application stage. Once initial checks are performed and an application has been accepted, we also carry out standard fraud checks on all potential borrowers to ensure that our credit decisions are safe and accurate. Such checks can be quite time-consuming, but the secure use of Open Banking helps automate the process to ensure checks are completed swiftly and thoroughly.   

What does this mean for Fleximize customers?

We've integrated Open Banking technology into our underwriting and compliance process because it simplifies the steps that SMEs have to take when applying for a loan. It also takes less time for our Fleximize team to process each application. This means we can offer an even better service and help businesses get faster access to the financial support they need. 

Open Banking makes it much easier to complete your application, by removing the need to upload many different documents about your financial history. Instead, potential borrowers can complete this stage with the click of a button. To give you an idea of what this means in practice - it typically takes 45 minutes for one of our underwriters to thoroughly assess a customer's bank statements. If Open Banking is enabled, the same checks can take an underwriter as little as 10 minutes. By checking nearly five times more applications, this new technology means our team can reduce waiting times for our customers and provide them with a final decision within just 24 hours. 

The secured sharing of data using Open Banking also means that customers are not required to share any bank logins or passwords, or to share important documents via email or post, so they always have control over their personal information.   

Our future plans for open banking

Open Banking presents a huge opportunity to improve the experiences of our customers, and we’re already planning new ways to enhance our services by leveraging this exciting technology. With instant access to rich data, Open Banking means that it becomes possible for the team to accurately predict what we’d be able to offer a business, including the maximum loan amount and term lengths, before they start an application. By providing businesses with an indicative range, we can prevent busy SMEs from applying for a loan that’s unfeasible, saving them even more time. 

At this point in time, Open Banking can be used by all customers who apply directly to Fleximize, but not those who come via a third-party, such as brokers. However, we’re currently working to extend the use of Open Banking to our broker clients so they too can enjoy the benefits. 

Fleximize is also looking to use Open Banking to easily perform additional checks on affordability. These will be automatic, and therefore won’t affect the speed of our decision-making, but will further enhance our commitment to responsible lending. This would look at issues such as over-borrowing and late payments, to ensure all our customers can comfortably manage their loan facility. 

Finally, Open Banking presents the possibility to instantly approve or reject low-value loans by automating loan processing and underwriting. This means that, in the future, we may be able to fully automate lending for low-value loans, so businesses have a response in a matter of seconds rather than hours.

Need more information?

As with any new technology, there has been some hesitancy among the general public and financial institutions to embrace Open Banking, but it's already making dramatic improvements to alternative lending. With enhanced security and seamless integration, Open Banking is there to protect borrowers and help them to access vital financial support without delay. 

If you have any questions or want more information about how we use Open Banking, do get in touch with the Fleximize team. Feel free to give us a call on 020 7100 0110, or contact your relationship manager directly.