When talking to customers about Open Banking the two questions we get asked most frequently are 1) can I see it in action (does it really exist) 2) do I need to be a registered AISP. I'll be going through both of these in this post. If you haven't already read the other two posts in this series check them out here Practical Guide to Open Banking and PSD2 Part I: Lending, and here Practical Guide to Open Banking and PSD2 Part II: Are you ready?
Demo
First, lets take a look at Open Banking in action. For the lending use case there are two sides to it, 1) the borrower providing their consent to access the account and 2) the lender using this data as input to a credit decision. In the video below we demonstrate the first step, a borrower providing consent as part of the loan application journey.
This example shows the borrower providing consent to access their AIB account, using Plaid, from within the Luna Connect Digital Lending Platform.
When consent has been granted by the borrower, and the data can be accessed, it is synced to the platform via APIs and is used in the credit decision process by the lender. The bank account information and transaction history (similar to what you see on your online banking) can be viewed, real-time analysis of the data mean tasks such as affordability calculations, incomings and outgoings are calculated in less than a second, and AI models are used to automate processes that were traditionally manual.
The next video shows the lenders view, accessing the transaction history, output of the data analysis and AI models.
Regulation
To answer the question "do I need to be a register AISP", the short answer is maybe, but you need to seek specialist advice relevant to your situation, at Luna Connect we have been working with both PSD2 and GDPR for the past 3 years and are very familiar with both, but you do need to get your own legal and regulatory advice. The Financial Conduct Authority (FCA) in the UK has great information on AISP models under PSD2 and is a good place to start. Under PSD2 you do not need to be a registered AISP to consume banking data, however there does need to be an AISP in the data chain and it is their responsibility to obtain the users consent to access banking data. The data can be passed along the data chain to an Agent of the AISP or another person that is not providing AIS back to the end user, for example using the data as an input to a credit decision. As well as PSD2 there is also GDPR to consider, each party in the data chain needs to comply with GDPR and data protection laws, whether thats as Controller or Processor of the data.
Lending Journey
Open Banking is revolutionising online and digital lending, however its one part of the overall lending journey. Next we are going to start looking at other areas including, digital marketing, customer onboarding, KYC\AML, data gathering and analysis, credit decisions, payouts, signatures, business analytics and return on investment. Subscribe to this blog to get notified when the next post is published and keep up to date with everything online and digital lending.
If you would like to find out more about Luna Connects Digital Lending Platform you can contact me at brian@lunaconnect.io. If you'd like to see a demo of the full customer journey in the platform request a demo below.
