Open Banking Steps Up: Bud Announcement, Fiinu Launch and the Evolution of Open Finance

The evolution of Open Banking continues apace. In this episode of Data, Strategies and Trust, we bring together some of the concepts and approaches which are driving the data solution forward and making it an increasingly recognisable piece of the banking customer journey.

Hosting the show is TransUnion's Celso Nogueira. Celso joined TransUnion’s Brazil business in 2016 and has specialised in the development of Open Banking solutions. At the beginning of 2023 Celso moved to TransUnion’s UK business as our director of product management – Open Banking. Bringing a global perspective to the table, Celso talks with Sam Buckley, senior credit consultant – Open Banking, about the adoption of Open Banking in the UK, emerging use cases that we are seeing in the market and the recent announcement of TransUnion going into partnership with Bud, which is designed to drive greater financial inclusion.

In the UK, TransUnion was an early advocate of Open Banking, viewing the technology as a way to improve customer acquisition, customer experience and enable more informed and fairer lending decisions. Contributing to the discussion in this episode is Chris Sweeney, CEO of Fiinu, a consumer-focused fintech that secured its Financial Conduct Authority license in 2022. Chris' career to date has included being CEO at 118 118 Money and prior to that, CEO and Executive Director of Vanquis Bank. With over 20 years’ experience in consumer finance and retail banking, and a track record of driving businesses forward through strategic transformational change in the UK and overseas markets, he's helping to launch Fiinu this year.

Chris talks to Sam about crafting Fiinu’s consumer-facing proposition, how they are innovating by putting open banking at the beginning of the customer journey and the exciting ways it and open finance can help consumers access appropriate financial products.

Speakers:
* Celso Nogueira, director of product management – open banking, TransUnion in the UK
* Sam Buckley, senior credit consultant – open banking, TransUnion in the UK
* Chris Sweeney, CEO of Fiinu

Open Banking Steps Up: Bud Announcement, Fiinu Launch and the Evolution of Open Finance - podcast transcript

Celso
Hey everyone, this Celso speaking. I'm a product director at TransUnion UK focused on Open Banking and everything it can help consumers and business to achieve. I have a long background in financial services, having working for years with large banks and credit agents. As you can recognize, I come from Brazil, which is a rapidly evolving markets for Open Banking as well.

TransUnion is a global information and insights company with a mission of information for good. We believe in the power of analytics to better understand consumers and deliver value added solutions to clients. In simple terms, we help business such as financial service companies, utility companies, and retailers use our consumer data solutions and software to make accurate and reliable decision.

So, these podcasts are produced to help listeners better understand the average changing data and technology landscape. With me. I have Sam Buckley, one of the great experts in the UK and the European financial service ecosystem. Hey Sam, hope you're doing well. If you can, please introduce yourself.

Sam
I'm Sam Buckley, senior Credit Consultant in Open Banking at TransUnion. I work with our customers across multiple sectors, including banking and lending insurance, gaming and government to introduce and develop open banking solutions to help them better serve their end customers.

So, I joined TransUnion in December, 2021. Prior to that, I have over 15 years experience working in credit risk, in roles such as head of credit, so I’ve first-hand experience of some of the challenges our customers are facing in delivering best in class affordability and credit worthiness assessments, managing credit risk, and the businesses, while enabling growth.

So, I'm really excited to be here and talking with you, sell so about Open Banking and how it's helping TransUnion customers better empower their customers for good.

Celso
Good. So, Sam, having this context in background, what's your view on how Open Banking has landed in the UK, both for consumers and lenders?

Sam
That's a great question, Celso. So, consumers continue to increase their adoption of Open Banking, and that's driven by a combination of things. So firstly, consumers are becoming much more aware of the value of the information that they can share and how that can enable them to get access to better product.

At the same time, firms and platforms are evolving and developing solutions that use Open Banking to underpin that and those platforms are then available for consumers to engage with. And the two things are complimenting each other to increase that adoption throughout the UK.

Celso
Great Sam, and in fact, we observed an increase of 1 million consumers every 4 months. Just to emphasize, before the pandemic, the percentage of Open Banking consumers over the total adult population in the UK was 2%. Nowadays it is 11%. We have a room for growth across several sectors.

Sam
That's correct, Celso. And during the pandemic, not only did the adoption of Open Banking increase across the board, but also for certain demographic profiles that previously were less engaged with digital platforms. So older demographics, demographics of the UK consumer that until the pandemic had engaged less with digital platforms. So, this is creating a really broad and wide open Banking use across the UK throughout the different age profiles and customer profiles.

Celso
And you know, I think this is exciting given that we would all agree that we are living in the age of the consumer where access and choice has never been higher. As consumers demand more and more seamless digital experiences, more competitive products, and very important, they expect more transparency and ownership of their data and are increasingly willing to play an active role in their financial journeys, and open banking is a great example of that.

Sam
Absolutely, yes. So, consumers are very aware that their transactional data, that's securely accessible to them via Open Banking, can be exchanged with platforms and firms to get access to better products. And that information is very powerful for firms in making the decisions on being able to offer the best price product and the most suitable product for that individual that is applying for those solutions.

Celso
We, we recently announced our partnership with Bud. Bud is an intelligent platform that's utilized Open Banking to power lending, customer engagement, customer experience, and a range of other use case. They do it through data categorization, data attributes backed by a best-in-class text tech and cutting edge technology team.

So, Sam, would you have perhaps a few examples of use cases that Bud is offering and how they are benefiting companies and consumers?

Sam
Yes, absolutely. I think a great use case example is within a consumer lending application journey for a customer. So, by exchanging and connecting their accounts, consumers are able to allow that, that information to be shared with the lender that can use that as part of their assessment of the affordability assessment, the credit risk assessment, and matching the product to be the most suitable for that consumer.

So, I think a great example is within that application journey where a consumer is looking to gain access to the most suitable product for them, then that Bud Platform allows consumers to connect their accounts with very minimal effort in a secure way, under a very clear value exchange, and information around how that information's going to be used, and that enables a customer or a consumer to link their accounts via the Budd platform and for that information to be shared with the lender as part of the application journey.

Another great use case is when consumers potentially are in an account management or in a collections environment, then open banking can be really used to support that engagement between the customer and the underwriting agent in order to facilitate reviewing their income and expenditure and looking for ways to support that consumer in getting back up to date with payments and helping them to continue to achieve their financial goals.

Celso
And as we are a global organization, we believe that Bud’s capabilities can also be deployed to other markets where we operate such as India, Canada, Brazil, these markets, open banking matures also evolves.

And then we are also looking to the future of Open Banking towards open finance with potential inclusion of additional financial service products like savings, loans, investments, should enable more innovation and great inclusion while delivered good customer outcomes. So, what's your view on the future of open banking?

Sam
So, Open Banking enables consumers to connect their current accounts, their savings accounts, and their credit card accounts. But of course, consumers have access to other financial services and other areas where they could look to bring those together.

So, an example of that is consumers pensions accounts, their investments and a variety of other types of information that consumers will have around their products. And open finance is about taking Open Banking and expanding that out beyond just current account, savings and credit cards, through to the wider ecosystem of data.

And what does this mean for consumers? Well, it means that they're able to have that same empowerment of their data and financial data footprint and bring all of those products and solutions in one place to help them to get a single end-to-end view of all of the services they have in one place, but also to use that information to gain access to better products, better services.

Celso
It's great to hear around the use of open banking for financial inclusion. In fact, we are gonna have a conversation with Fiinu, who is leveraging Open Banking to help consumers to build credit to allow better financial services.

Sam
Yeah, so Fiinu have innovated to introduce Open Banking and put it right at the heart of their customer journey in affordability assessment.

Celso
Well, let's go into that discussion with Chris. That should be exciting.

Sam
I'm talking to Chris Sweeney, CEO of Fiinu. Chris is here to talk to me about the launch of the Fiinu platform, which is underpinned by TransUnion open banking. Now, Open Banking is a really exciting topic at the moment, enabling consumers in the UK to get access to better financial products, get better insights and management of their personal finances, and driving financial inclusion for consumers that might otherwise have difficulty accessing financial products.

Chris, thank you for joining me. If you'd like to just introduce yourself and provide a little bit of background about yourself and your time at Fiinu.

Chris
Thanks, Sam. So, I'm Chris Sweeney. I'm the CEO of Fiinu, most recently licensed new bank in the UK. I've got a background in financial services and retail, but the lasT 12 months I've been involved in this exciting project of launching Fiinu Bank to serve what we see as a sizeable, underserved sector of the UK population and do something completely different by bringing the world's first plugin overdraft, enabled by Open Banking, to UK customers - particularly the vast number of underserved UK customers.

Sam
So, Chris, I have to ask, where did the name Fiinu come from and what does it mean? I've just got to say that I've worked quite extensively in the Nordics, so I'm gonna test my memory here, too.

Chris
Right! Well, so the first thing is our founder, Marco, is from Finland, and part of our journey has been his experience on arriving in the UK and finding it hard to access financial services. The way I like to think about it though is, the clues in ‘fin new’ as in ‘finance new’. So, a new way of doing finance in the UK and hopefully we can explain that a little bit further.

Sam
We'd love to hear about the vision of Fiinu. If you could just give us a summary of what the platform offers, what the product offers consumers, and what you see some of the key benefits of this bringing to your customers – particularly at this moment in time with the UK consumer experiencing in many challenges financially, through the cost of living, changes in interest rates and so forth.

Chris
We see ourselves as pioneering smarter solutions for customers. Given what's happening in the global market and customers feeling the squeeze of difficult finances, cost of living, you know, our role and our ability to help with financial fairness and give customers more freedom is critical.

And so we have developed and built, using your capability, we have built the world's first plugin overdraft. And quite simply, that gives customers the ability to access an overdraft regardless of whoever they bank with. So traditionally the overdraft market has been heavily driven by the high street banks. Your overdraft is linked to your current account, and therefore that has been the only way that a product that let's be clear, has been in the market for circa 300 years, has worked.

And we have, using your Open Banking capability, we have developed a way to plug in an overdraft completely agnostic of whatever personal, current account you use and where that is a massive advantage is for two reasons.
The first is we know that customers are more likely to get divorced than change current account. So, there is a massive amount of inertia around anything that is linked to your current bank. The second aspect is we know since 2019 there has been regulatory change in the market that means with the advent of the removal of unauthorized overdrafts and the horrendous fees that the banks were charging, instead of the products being replaced, products have just been removed from the market.

So, to give you an idea: in 2019 of 33 million people who could use some form of overdraft by 2020, 16.5 million of those customers have lost access to an unarranged overdraft, or any overdraft. And even if you think that was just a one-off, to give you an idea: in 2022, another 6 million people lost access to an arranged overdraft.

So again, we see a very large population in the UK that are currently struggling to access an overdraft, would like to have one, and we think that could be as high as 29 million people. And so that's a significant opportunity and it's a significant underserved sector, and we think our product is ideally suited to help those customers.

Sam
That's brilliant. And as a credit consultant in Open Banking, I work across a number of different sectors and with a number of different firms and one of the key enablers of Open Banking is in that financial inclusion, to allow consumers that may have difficulties in accessing certain financial products and giving them the ability to connect and share their banking transaction data in exchange for better access to improve financial products and inclusion in those types of solutions.

Chris
Sam, just on that, I mean, I completely agree with you. You know, it does promote that financial freedom. I think it does even more than that, though. We're using not just Open Banking to give customers access to the data; we've designed it in our solution, so that it removes friction from the customer journey, so it makes it easier for them to find products that are fit for purpose. We're using open banking to do some of the hard work on behalf of the customers. It improves the service experience, and it helps customers manage their finances more proactively than typically has been the case.

Sam
Yes, and I think that's a brilliant point, in terms of that customer experience and the customer journey in terms of getting that additional value. And I think one of the key propositions of the Fiinu platform is putting Open Banking right at the start of that application journey to demonstrate how much value that can have in the customer experience.

Is that something that you see customers responding to in terms of that positive experience?

Chris
Yes, that is exactly how it works. What we're doing is we're using Open Banking right up front as the first stage in our process to say to the customer, “Look, we've looked at 12 months worth of history in a split second, and we think we can offer you X. If you are interested in that, please continue to the next stage in the journey”.

Now our app's a little bit slicker than how I've explained it, but that's the point – we take hard work and we remove friction as a result of using the open banking capability.

Sam
And by using the open banking data to assist with that affordability assessment that is going to further differentiate that ability to make an assessment of a customer, from an affordability perspective, that is really tailored towards their specific financial circumstances, which will help deliver that positive customer outcome throughout the product.

Chris
You know, really that first stage and putting Open Banking right up front in our customer journey - you know, we're satisfying our obligations to the customer that we’re providing a product that meets their needs and is fit for purpose, and that's the right way to start a relationship with a customer.

Sam
Absolutely. TransUnion support businesses, like you said, with a wide range of solutions that have been designed to enable yourself to deliver those good customer outcomes through providing that customer experience and affordability and product assessment. TransUnion's motto’s “Information for good’. In addition to this, we also strive to offer speed of delivery solutions and enhancements, and that support on the kind of longer term vision for where open banking is heading towards.

We recently announced to be investing in partner with Bud to power our Open Banking platform, and we see this partnership is going to lead to us building solutions that bring together credit and open banking data into a single solution that will further enable better credit risk and affordability assessments, as well as bringing that customer experience to be kind of fully joined up across the two data sources.

I actually, late last year, took part in the FCA policy sprint on open finance, which demonstrated the future is even wider than open banking and will expand into open finance, bringing further data sources into that ecosystem – not just banking data but pension investment, insurance, further empowering consumers to be able to achieve their financial goals by bringing together all of that financial inform.

In terms of the longer term vision for the Fiinu product, are there any other product enhancements and areas that you think that this will move into as the product kind of expands?

Chris
Well, we’re keen, obviously to use open banking to the maximum amount possible throughout the customer life cycle. So, although we've spent, you know, time talking about how we use it early on, obviously our ability to interact with the customer's data throughout the life cycle allows us to adapt and change our product and services to continue to meet the customer's evolving lifestyle and life stage. It is not a static assessment.

In terms of whether that means we deliver additional products and service, that that's probably unlikely. We see ourselves as keeping our model as simple as possible and, and that's serving customers through a plugin overdraft. Where we do see further opportunities though, is in the ability to take the product, the technology stack, and the capability and look to deploy that in other markets where there are similar circumstances.

Now, whether that's as a bank or whether that is a licensed technology provider, again, we see significant opportunities to broaden our horizons beyond the UK.

Sam
Excellent. At TransUnion, we are a global company, so we are also looking to expand our Open Banking capabilities beyond the UK and we do believe that our investment and partnership with Bud will help accelerate that process.
So, in the UK we see adoption of open banking solutions continues to increase. We're seeing that throughout the pandemic we saw different demographic profiles of customers that were moving towards digital platform. So, the older demographic of customer started to engage more frequently with digital platforms.

Currently, over 10% of the UK population is engaging with an open banking solution, but that does mean that there will be some profiles of customer that aren't familiar with the Open Banking process. Is that something that's been considered, in terms of designing the Fiinu application process and that experience to ensure that customers are kind of guided through that process as seamlessly as possible?

Chris
Yeah, exactly. I mean, what we've tried to do is focus on technology as the enabler, and so early in the process, the customer gives us the consent, and then actually we're more focused on the value we can add as a result of access, than the actual service itself. So, it's more what we can do with the data and what we can give the customer as a result of it.

And because it's seamlessly built into the journey, we expect that it will bring a new audience to open banking and the benefits of open banking. We think that's good for customers and we think that's good for the broader population.

Sam
Absolutely. And as Open Banking solutions and offerings continue to be launched and developed, and as Fiinu expands the customer base and customers become more familiar with Open Banking journeys, I expect that 10% will continue to increase, and in a year or two's time, we will be actually talking about the majority of customer journeys, having some form of open banking interaction, which will be brilliant for consumers to be able to gain access to those type of solutions.

Chris
Oh definitely, I mean, I think we see exactly the same from our side and we also see, as open banking expands and there are more service providers who utilize that capability, there's also opportunities for us to collaborate and work in partnership with other providers who are already have open banking access. So again, I think there's new partnership models that can emerge as a result of the use of this technology.

Sam
From a regulatory perspective – so the FCA have very positive endorsements of, open Banking – in light of the consumer duty process that is continued to move forward, and in terms of your product design of the Fiinu platform and your engagement with the FCA, have you taken into consideration some of those aspects of the good customer outcomes and the roadmap towards the customer duty as part of the design of the Fiinu product?

Chris
Very much so. So, the principles around the customer duty are actually built into our product governance and filters through product design, product control, product review, management information et cetera, et cetera and obviously therefore is embedded in our customer journeys that we've developed.

So, yeah, I mean, that's one of the benefits I think of being a new startup. I think it's also the benefit of using the technology in the way that we have, because we are doing a lot of the assessments and the ensuring the product is fit for purpose and then used technology to ensure it remains fit for purpose in a different way than's traditionally been done, and that for us is a massive advantage.

And obviously we've worked with both the FCA and the PRA to make sure that our product meets expectations of both them and obviously most importantly, our customers. So yeah, it's been a, it's been an interesting journey, you know.

For us that journey started in 2017 and obviously really got real when we put in our application to become a fully fledged bank in January '22 and then we received, obviously our license with the restrictions in July of last year and now, uh, we're in our mobilization phase getting ready to the necessary approvals to go live July of this year.

Sam
That's excellent. From going live in July this year to, how do you foresee the next, few months to the end of the year?

Chris
So, like any new startup, we'll be making sure that everything works correctly. We will start to onboard new customers, but we will build the levels of customer recruitment more slowly in the first phase, like any good credit provider. Whilst we do think there'll be considerable demand for the product, we need to be careful that we understand all of the data, the product works in the way it is.

So it probably, the first six months will be slightly slower than certainly the second, six months of our first 12 months as we sort of just retest, and make sure our credit decisions are accurate, and then obviously we'll look to build, build on that strong platform.

Sam
That's great. Thank you for joining me, Chris, on today's podcast and I'm looking forward to continually working with yourself and the team to support that product launch in July and throughout those months in the early launch phase and beyond. And it's great to see that TransUnion's Open Banking solution has been underpinning the Fiinu product.

Is there anything else you would like to say to our audience ahead of the exciting product launch in July?

Chris
No, other than say, Sam, thanks to you and the team, you know, we've done something truly innovative together and we look forward to working with you and the wider TransUnion team going forward, so brilliant!

Sam

Thanks Chris.

Celso
What a great conversation with Chris from Fiinu. You know, it's encouraging to see how they are utilizing Open Banking to achieve their mission of allowing better access to financial solutions for consumers here in the UK. We wish the best, Fiinu, and we look forward to continuing our partnership with them.

So Sam, after all this discussion and conversation, what are you looking forward to doing in 2023 and what are your takeaways from today's talk?

Sam
Thanks Celso, yeah, and I agree it's a great example of Fiinu using innovation to look to implement open banking to underpin the heart of their decision making for their product and the platform.

So, what am I looking forward to for the rest of the year? So, I'm really excited by our partnership with Bud. I think the combination of our expertise and our experience in consumer lending and Open Banking and across all of the different sectors that we work in, combined with Bud’s technology platform and expertise in the solution that they've developed will really help us to bring open banking to the customers that we work with this year.

And I'm really looking forward to working across the different sectors, so across the banking and lending, but also the gaming sector, where we're supporting clients in that space to, better serve their customers, and also insurance collections and e-commerce, and also public sector as well. So, across all of the different vertical markets, we're supporting our customers to bring open banking into their solutions to better serve their end customers.

Celso
Great Sam. I want to thank you, and I also want to say thanks to Chris from Fiinu for his time, for sharing his experience with Fiinu. I also want to say thank you to all of our listeners. If you have the chance, please follow and review us on your favourite podcast platform. We look forward to seeing you again.