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Open Banking turns two: 15 apps set to transform your money

Find out how Canopy, Moneybox and Toucan and others plan to transform borrowing, saving, credit scores and more

Open Banking turns two: 15 apps set to transform your money

Today (13 January) marks the second anniversary of Open Banking, an initiative to unlock your data and help you budget, save and borrow better. But how successful has it been?

Two years ago, the Competition and Markets Authority (CMA) ordered the nine largest UK current account providers to open up their data.

It was hoped that approved third parties, such as budgeting and savings apps, could ‘plug in’ and access the information, in a secure and standardised way, to help people improve the way they manage their finances.

However, three quarters of people have still never heard of Open Banking, a Which? survey in 2019 indicated.

In an effort to raise awareness, a new competition is working to highlight the innovations enabled by Open Banking. Here, we look at some of the finalists.


The 15 Open Banking innovators to watch

Nesta, an innovation foundation, has shortlisted 15 ‘fintech’ companies developing innovative solutions that use Open Banking.

You can take a look at this year’s finalists in the table below and by following the links.

Personal finance management Savings Debit, credit and alternatives Other

Cleo

Kalgera

Moneyhub

Toucan

Tully

Moneybox

Plum

Creditspring

Portify

Updraft

Wagestream

Canopy

Currensea

Mojo Mortgages

Sustainably

Finalists will receive £50,000-£100,000 to support the development and marketing of their services, together with extra support.

Nesta will be launching a nationwide digital marketing campaign to raise awareness and trust in Open Banking, featuring each of the 15 finalists.

The finalists will face the judging panel that selected them again in June 2020, where three to four winners will be picked to receive a further £150,000-£200,000 to develop their vision.

So what could these finalists mean for your money? We’ve picked seven of the most interesting examples.

The cash-flow, saving and borrowing apps

Open Banking has raised the bar on how we borrow, save and get paid. Find out more about three of the innovators in this space below.

Wagestream

Wagestream is designed to help shake up the way we get paid.

It lets employees ‘stream’ their wages as they are earned, to use or save, providing extra flexibility over when you are paid.

So if you think you are better at budgeting weekly rather than monthly the app could help you unlock your wages when it suits you. Just bear in mind there is a £1.75 flat-rate withdrawal fee.

Wagestream plugs into a business’s workforce management software so it relies on employers signing up.

However, it stresses the benefits to employee wellbeing and promises firms can get up and running within four weeks or less, without it impacting existing systems or cash flow.

Moneybox

Moneybox enables you to start saving with your spare change.

It uses Open Banking to link to your accounts to monitor your spending and drawing money from accounts by rounding up purchases.

So if you spent £2.40 on a coffee it would round up the purchase to £3 and invest 60p.

You can choose for this money to go into cash savings account like its lifetime Isa or invest it – which involves risk – using tracker funds.

Creditspring

Creditspring charges a monthly fee to access to two pre-approved loans a year giving people with low levels of savings an alternative way to borrow for unexpected costs.

You can pay £6 a month to get two loans worth £250. Repayments of each loan are spread across four months at a cost of £62.50. The representative APR is 87.4% in this scenario.

Alternatively, you can pay £8 a month and get two loans worth £500. Repayments are paid back over six months in instalments of £83.33 (representative APR of 38.6%).

Creditspring works like a safety net: after the 14 days cooling-off period, you’ll be able to borrow the pre-approved amounts whenever you need. Instead of interest, you pay a fixed monthly membership fee so, you always know exactly how much borrowing will cost.

Neil Kadagathur, Co-Founder and CEO, says its membership-style loans are a more transparent way to borrow, compared to overdrafts and other short-term options – and Open Banking will allow the firm to lend to more people that are traditionally locked out of credit.

The Which? Money Podcast

The mortgage and credit-builder apps

Some areas of personal finance rely on archaic means of proving identity or credit-worthiness. These fintech companies have started to use Open Banking to give mortgages and credit scoring an update.

Canopy

Canopy is a rent-reporting platform that allows you to make sure the money you spend on rent counts on your credit report.

Your credit report could matter when you apply for a mortgage to buy your own property.

It uses Open Banking to track the rental payments you make, without ever having to go through your landlord.

The information is reported to Experian and doesn’t require you to change the way you pay like some other rent-reporting services.

Mojo Mortgages

Mojo is an online mortgage broker that is trying to wield the data of Open Banking to help people borrow to buy a home.

It’s a whole of market broker that lets you explore mortgage deals from more than 90 lenders and then get expert advice on the best option for you.

Mojo has designed MortgageScore, which will combine credit and Open Banking data to determine if a customer is mortgage-ready.

The coaching feature will provide personalised advice on how users could improve their score and improve their chances of getting a mortgage.

The personal finance management apps

Open Banking has paved the way for some firms to consider the wider implications of personal finance management and help those around us keep on top of their money too.

Kalgera

Kalgera is designed to help you keep your loved ones and their money safe from fraud.

Once plugged in it can help you spot unusual activity on their accounts, without sharing account details.

Parents or other loved ones can share transactions and alerts without sharing bank account details and without giving you the ability to move any money.

It’s been designed to safeguard vulnerable people without taking away their autonomy. Half of UK adults show signs of potential financial vulnerability and lose £1.2bn to fraud and scams every year.

If your loved one’s needs are more serious you might want to consider getting Power of Attorney.

Toucan

Toucan is taking money management to the next step and acknowledging the challenges associated with talking about money.

It works by connecting your bank account to a friend or relative and sending an alert when it spots a red flag.

You’ll need to tell Toucan what to watch out for, like your balance dropping under a certain amount and nominate a trusted person to get the alert. It’s meant to lighten the load and help share money worries.

The technology might help younger people going off to university and worried parents that don’t want their kids to get caught out with no way to contact home to let them know there’s a problem.

What are the barriers to Open Banking?

Open Banking has the potential to improve the way in which we manage our finances.

However, seven in 10 respondents to our survey said they were unlikely to consider sharing their financial data, even if it meant that financial products and services were more tailored to their needs.

The main reasons for being unlikely to share financial data were:

  • ‘I am happy with my current banking arrangements so don’t see a need for an Open Banking product’ (64%)
  • ‘I am concerned about the security of my personal/financial details when shared with a third party’ (41%)
  • ‘I am concerned about data privacy’ (41%)
  • ‘I am not prepared to share my data with third parties’ (40%)
  • ‘I prefer just to deal with my own bank’ (27%)

Which? believes if Open Banking is to be a success more needs to be done to educate people and reassure them over data privacy fears.

Jenny Ross, Editor of Which? Money, said: ‘Open Banking could be revolutionary for giving consumers greater control over their finances and more choice over the products and services they use – but two years on, huge numbers of people are still in the dark over what Open Banking is, or are reluctant to use it.

‘If Open Banking is to ever be a success, regulators and industry must do more to promote the benefits and demonstrate that customers are properly protected from data breaches and scams in order to boost trust in these services.’

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