Non-captive car finance lenders are among the parties that will benefit the most from access to borrowers’ data under open banking, analysts at Moody’s have said in a note.

Under the open banking initiative, which came into force in the UK in January, the country’s biggest current account providers are required to share customer data with third party lenders, provided account holder has given permission to do so.

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Moody’s said this will level the field for non-bank and non-captive consumer lenders, particularly in car finance, who do not have access to the data and insights afforded by having a customer deposit base within the same organisation, as the likes of Volkswagen Financial Services do.

“Unlike high-street banks, very few borrowers maintain current accounts with non-high-street-bank customer loan providers,” said Greg O’Reilly, vice president and senior research analyst at Moody’s.

“Open banking allows these lenders easy access to borrowers’ details, potentially cutting the costs involved in assessing bank account information.”

Moody’s expected improvements in underwriting and pricing, and pointed to fintechs as the segment best placed to capitalise on open banking, thanks to the rapidity of their product development.

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On a more cautious note, the rating agency warned easier access to credit products, together with more intense targeting of potential borrowers, could translate into consumer overindebtedness.

“More data … may encourage the proliferation of financial products that encourage consumers to become over leveraged.

“In the event of a downturn, borrower defaults and losses would be higher than in a less indebted consumer market,” it said.