Industry · 4 min read

How fintechs can improve customer engagement using open banking

Open banking is transforming the way consumers manage their financial data, ushering in an era of greater clarity and control over personal finances. This has not only proven positive for consumers, but it also opens up a world of opportunities for third party providers, such as fintechs, to deliver more personalised services and an improved customer experience.

Capitalising on this trend, several fintechs have emerged which are enabling consumers to make better use of their financial data and to make and receive fast, secure payments. Fiinu is one such example of a company driving innovation through open banking with its first-of-its-kind unbundled overdraft solution

In this article, we

  • Explore the different ways in which open banking can benefit consumers
  • Analyse Fiinu’s Plugin Overdraft
  • Illustrate how Fiinu has leveraged open banking to transform lending in the UK.

Fiinu’s Plugin Overdraft is powered by Tuum’s next-generation core banking platform.

Get in touch to learn more.

How open banking can benefit consumers

The rise of open banking has proven beneficial for consumers in a number of ways. The trend has already seen widespread adoption, and is ensuring financial products and services are kept up-to-date with modern financial needs. As a result, benefits are being realised on the part of both the consumers and the financial service providers.

Financial data control

Open banking, and the regulations which encourage it (e.g. PSD2), are aimed at improving the level of control consumers have over their financial data. Not only can consumers specify which companies are allowed to access their data, but they can also control the level of access granted, ensuring that only relevant information is at the third party’s disposal.

Overview of personal finances

Open banking also enables account aggregation, meaning consumers with multiple bank accounts can pull data from each of these to be displayed in one streamlined view. This is an essential tool in helping consumers to get a clear picture of their financial health, thus mitigating the chance of unforeseen expenses, rejections, etc.

Smarter financial management

The data gathered in this streamlined view can also be used by third parties which have been granted access to it. In turn, these third parties can make spending and saving suggestions to improve the consumer’s overall financial health. These suggestions can include recommendations around the best credit card options or loans adjusted to earnings and expenses.

Tailored products and services

In addition to making recommendations, financial service providers can also use the data gleaned from open banking to create products and services that take the consumer’s specificities into consideration. With multiple, accurate points of data, providers gain a clearer understanding of who they are serving.

Fiinu’s unbundled overdraft solution: Plugin Overdraft®

Overdrafts are one of the most commonly used financial services in the UK market. According to research, 62% of the population of the UK, amounting to 32m people, use an overdraft annually. 

Despite this, access to overdraft services is limited, with significant banks proving reluctant to approve overdraft lending. Additionally, an FCA ruling in April 2020 caused further restraints in the overdraft market.

In turn, this has produced a £10B funding gap and has caused undue stress to millions of consumers who face rejection. Additionally, many consumers turn to riskier forms of credit which can damage their credit scores. 

Recognising this gap in the market, Fiinu conceived their bank and retailer-agnostic Plugin Overdraft®. Built on Tuum’s lending module, this unbundled overdraft solution gives Fiinu’s customers access to overdraft services without having to switch banks or current accounts. Using open banking APIs, customers can link one or multiple accounts to their dedicated Fiinu overdraft account.

Read about Tuum’s lending module

Furthermore, as Fiinu’s underwriting models utilise open banking, rather than traditional underwriting methods, its overdraft credit can be offered to a far wider number of consumers. As a safer alternative to some POS or BNPL credit facilities, Fiinu’s offering also protects its customers’ credit rating. 

The fintech industry is once again proving to be an innate problem solver. At a time when consumer demand for credit is rising, open banking-led initiatives such as Fiinu’s provide the answer to improving financial fairness in the lending industry.

Empowered by Tuum

The Tuum next-generation core banking platform enables fintechs to rapidly develop, test, and launch their financial products and services. Get in touch with us to learn more.

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