How open banking helps you get better credit decisions

How open banking helps you get better credit decisions

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If you’re a Juni customer or use other leading fintech platforms, you’ve probably come across open banking. Heralded by the Financial Times as a “revolution” when it came into effect in the UK in January 2018, open banking empowers you to use data that’s traditionally only been seen by you and your bank to benefit your business.

It became mandatory in the EU in September 2019 as governments around the world recognised the benefits of open banking for consumers and SMEs.

So, what’s it all about and how does it help you to get better credit decisions? Let’s look at how open banking works in general and how it’s used here at Juni.

What is open banking?

Open banking is a secure connection between your bank account and another account, such as your Juni account. It's something that all EU banks and the UK’s largest banks were ordered to create so their customers could benefit from financial apps, products, and services they didn't offer.

In the BBC’s words, open banking helps to “challenge banks' dominance”.

How open banking works

We’re not going to do a deep dive on the technicalities, but open banking works using open APIs. These allow you to give permission to send your banking data to the platform or software you want to share it with.

All permissions go through your online banking, so you always have total control. Before going ahead, you’ll see exactly what permissions you’re granting and your bank will check this, too. You’ll make the initial connection either via your bank or sometimes a third-party provider who manages it for them. You need to refresh the connection every 90 days to reconfirm the permissions and continue to benefit from open banking.

Open banking and data protection

Open banking is extremely secure. It’s as secure as online banking. All open APIs — the connection between your bank and a platform like Juni — must meet the standards set out by the Open Banking Implementation Entity in the UK, and the European Banking Authority Guidelines (as implemented by each member state) in the EU.

The API is created by your bank to conform to those requirements, so it’s effectively an extension of the level of security and data protection you’re used to from online banking.

As we’ve mentioned, all the permissions are handled through your online banking. That means you’ll always be able to control and see which data you’re sharing via an open banking connection.

All open banking services in the UK are regulated by the Financial Conduct Authority — the same body that regulates your bank, credit cards, and insurers — ensuring strict rules on data protection. In the EU, the European Banking Authority performs the same role, while each member state has its own financial regulator to uphold the rules.

How to connect Juni with your bank

Connecting your banking data to Juni is a very simple but highly secure process:

Start the open banking process

The process starts in your Juni dashboard via the Integrations tab. Select the external bank you want to authorise a connection with and add the integration.

You’re directed to our trusted third-party open banking partner

Our partners specialise in read-only API connections with thousands of banks worldwide. Rather than create our own connections with every single bank our customers use, we work with partners who do this every day and already have the connections in place.

You authorise the read-only API connection with our partners

At this stage, you need to authorise the connection. Depending on your bank, you might be redirected to log in to online banking or asked to scan a QR code to give authorisation. Keep in mind that you’ll be approving a connection with our partners for the reasons mentioned above. So don’t be surprised when it’s their name, not Juni, that you see.

Your banking data shows in your Juni account

As simple as that, your banking data is passed from your bank, through our partners, and into your Juni dashboard. You’ll just need to renew the integration within 90 days (all open banking connections expire automatically after 90 days as an additional layer of security).

Both Juni and our partners are regulated by the Financial Conduct Authority and European Banking Authority, so your data is always managed in strict compliance with data protection laws.

Now you know how to make the connection, let's take a look at why it’s a good idea.

How Juni uses your open banking data

Once you’ve created an open banking connection with Juni, we get read-only access to your data. How do we use that data, and why do we ask for access in the first place? For a few reasons:

1. Getting you onboarded faster

Connecting your bank account with Juni gives us the answers to many of the questions we need to ask when you create a Juni account. Open banking allows for faster onboarding, so we can quickly get you up and running with Juni.

2. Giving you a real-time overview of your finances

Open banking gives up-to-the-minute data on your financial situation. We can use that data to give you real-time insights on improving cash flow and an overview of your finances without you needing to log into various different accounts. That gives you the information you need to make better, faster, more informed decisions.

3. Reducing your admin

By combining open banking data with other real-time data from ad accounts, accounting software, and other platforms, we can save you a lot of time and ease your admin burden. We use open banking data to match bank transactions with purchases, automate reconciliations and auto-generate Google Ads receipts.

4. Making better credit decisions

If you’re a growing ecommerce business, do you want your credit lines to be based on last year’s sales or where you’re at right now? Company accounts tell us what happened last year. Statements tell us what happened last month. Open banking tells us what's happening right now. That’s one of the key open banking benefits: we can make better credit decisions based on the here and now. The more we understand your business, the easier it is to offer a credit line that’s right for you.

5. Gathering historical data

Open banking makes it easier to complete an accurate risk assessment when offering you credit. No lender would ask for all of your bank statements from the last five years. But with open banking, we can factor that volume of data into our decision-making processes. This plays into making better decisions.

6. Reaching credit decisions more quickly

Having access to historical and real-time data means we can make credit decisions very quickly. Without open banking, you’d have to collate all the information we need, submit it, and then wait while we sift through it. With open banking, it’s all digital. We already have access to the data. Long waits for credit decisions are eliminated.

7. Creating smoother credit applications

Have you ever applied for credit without open banking? If so, you’ll know that legacy lenders want to see a lot of paperwork before they’ll even start to consider a decision. You have to pull these together manually and send them across. With an open banking connection, we have instant access to the data we need to process your application.

8. Preparing to scale with you

Once your accounts are connected to Juni, we have real-time access to things like how your current credit lines are being used, long-term growth trends, and seasonal peaks. We can adapt to these things very quickly, such as increasing your credit limit ahead of your Black Friday ad spend.

Key open banking benefits

Open banking really is win-win. It makes life easier for us, but it also means we can pass those benefits on to you. Let’s recap some of the top benefits of using open banking with your Juni account.

Better rates and terms

Since open banking helps us make better credit decisions more quickly and with less admin, we’re able to offer better rates and terms if you use open banking.

Easier applications

Open banking saves you from having to pull reams of accounts, statements, and other paperwork together when applying for Juni credit.

Less hassle

If you don’t connect via open banking, we have to send more questions and requests your way. It slows things down and creates hassle for you.

Faster decisions

With all the financial data already available, we’ll usually have a decision on your credit application within 48 hours.

More valuable insights

Get an at-a-glance overview of your finances and insights from your Juni dashboard based on the data pulled in from your accounts.

Connect to Juni with open banking today

Start benefiting from open banking immediately by integrating your bank accounts to Juni through your dashboard.

How open banking helps you get better credit decisions
Juni
Financial platform

Juni is the financial platform built for ecommerce. We give you a unified view of your finances, with cards, mulitcurrency accounts, and banking, accounting and advertising integrations - all in one place. We can even help boost your cash flow with working capital, cashback and more.

Download our free whitepaper and gain important ecommerce and marketing insights, directly from Juni.

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