With the implementation of the Access to Accounts (XS2A) rule, banks will soon be able to access customer account data from other financial institutions.
The financial crisis of 2008 has shaped so many aspects of the financial world. Part of that legacy has been the significant impact on the way in which banks lend money. Today, banks sell few unsecured personal loans to new customers – of seven of the UKs tier one banks only two offer personal loans to new customers – instead focusing on the needs and data of their own clients. The establishing credit risk and difficulties of pricing accurately has simply made it too complex to be competitive. Customers have to submit lots of evidence – all of which leads to frustrating experience; for example to even get a quote for a personal loan from one of the tier one banks surveyed, the customer must submit address details for the last three years, as well as employment, income, and existing credit details. By-and-large, your own bank will be easier and cheaper – unless you have specialist needs; for example if you have a poor credit score.
An alternative option open to customers is peer-to-peer lending. However, a comparison of the process from a tier one bank to the equivalent in a peer-to-peer lending provider reveals a slower standard application turnaround time (up to three days) or an option to “fast track” the application for a fee. Also, although many peer-to-peer lending sites now have better protection for consumers as the industry became regulated by the FCA in April 2014, it can be argued this protection is greater for savers and lenders than it is for those borrowing and that the industry is still high-risk when compared with traditional routes.
