U.K.-based alternative small business lender iwoca is linking into data from Lloyd’s Bank accounts to streamline loan underwriting for joint customers.
In an announcement on Wednesday (Oct. 31), iwoca said it is the first SMB lender to link into a high-street bank via open banking, with the regulatory initiative allowing the lender to have direct access to bank account data. The integration will allow iwoca to analyze five years’ worth of transaction data from Lloyd’s account holders, accelerating the time it takes loan applicants to send information to iwoca and receive a response on their application.
“Open banking means high-street banks no longer have a monopoly on transaction data,” said iwoca Co-founder and CEO Christoph Rieche in a statement. “As a result, it’s now easier for small businesses to shop around and find the best financial service to meet their needs, without worrying about the brunt of loan application processes.”
He added that iwoca collaborated closely with the Open Banking Implementation Entity (OBIE) and Lloyd’s Bank to facilitate the integration. Looking ahead, iwoca is planning similar integrations with Barclays, RBS, HSBC, Santander and others.
According to Rieche, cooperation amongst banks and FinTechs is key to realizing the full potential of open banking.
“Therefore, it’s critical for banks and government to do all they can to enable and encourage the adoption of open banking,” he continued. “This will create greater competition in small business lending and, as a result, better, fairer services for small business owners.”
Earlier this year, iwoca formed its own open banking team to explore how the regulation will impact the small business finance market.
Last year, iwoca struck a partnership with Italian bank Intesa Sanpaolo, whose venture capital unit, Neva Finventures, also invested in the alternative lender, as the FI looked to expand its small business lending operations.