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Rolands Mesters, founder and managing director of Nordigen, discusses the beneficial effects that sharing data can have on our finances.

With an increasingly fragmented market and challenger banks snapping at their heels, traditional retail banks, in particular, need to re-orientate their assessment processes or risk being left behind.

The financial landscape has undergone significant change over the past few years, this is hardly breaking news. Large banks are readily partnering with agile fintech startups, and cash is predicted to make up merely 21% of payments by 2026. Despite this progress, up to 90% of loan applications are still rejected by banks and alternative lenders worldwide.

Many banks and lenders still rely on traditional data and inaccurate risk assessment processes. However, within the past few years, we have seen the rise of Open Banking, the development of new behavioural analytical solutions, and a huge increase in available data. The financial landscape is finally undergoing a much-needed process of evolution. Not only do we now have the resources, but we also have the tools to utilise them effectively.

Treading water

The fundamental problem, that is often overlooked, is that roughly three billion adults worldwide do not have credit records and struggle to open a bank account, secure a loan or purchase a home. Consider the catch 22 many immigrants face when arriving in a new country; one needs a registered home address to open a bank account, but cannot sign a tenancy agreement without a bank account. For those lucky enough to have credit, their data is currently processed by traditional credit bureaus that can provide suboptimal recommendations on their financial stability.

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