Good news for the lending industry: your bank transaction history is now freely accessible to a growing number of banks through Open Banking and Smart Accounts.
Information related to bank account turnover is essential in assessing the eligibility of people with financing needs who apply for loans offered by Non-Banking Financial Institutions (NFCs), especially when the account turnover, reflected in the account statement, is the only relevant and quickly available information for the immediate assessment of credit applications for certain categories of the population.
Smart Accounts facilitate the access of credit institutions to this information, using Open Banking technology and the consent of the account holder in a fast, easy, and secure way. With simple online consent provided by loan applicants, directly in the lending flow on the IFN websites, the history of banking transactions is instantly communicated by Smart Accounts directly in the IFN application. Then, scoring algorithms, specific to each IFN, automatically analyze the data to determine the loan's ability to repay and make an approval or rejection decision.
Although the period for which FIUs request bank transaction history may vary according to the individual requirements of each institution, the information has now become available for an unlimited period in the past at an increasing number of banks. Therefore, loan applicants can allow IFNs to directly interrogate their bank accounts for the requested period, without restrictions related to history limitation.
The extension of the period during which the turnover of accounts can be consulted and analyzed at more and more banks through Open Banking services significantly contributes to the replacement of traditional account statements with the direct inquiry of bank accounts of loan applicants.
Thus, IFNs now enjoy significant flexibility, allowing them to interrogate bank accounts for the periods required for their analysis and to customize lending processes according to the individual needs of each client. This further strengthens the path towards a much more adaptable and precise approach in assessing credit potential, while guaranteeing that the decisions taken are based on an exhaustive understanding of the applicant's financial history.
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