• 23.3 million adults are now unable to access mainstream financial products (under-served), including credit cards and loans — an increase of 3.14 million (15.5%) in just two years*

• TotallyMoney identifies three key drivers: the impact of the cost of living crisis on people’s finances, a credit crunch, and traditional credit reporting failing to keep up with societal changes

• The new open banking powered tool provides customers with actionable insights, so they can see what could be affecting their affordability and better manage their money

The launch of this new feature marks the fintech’s third open banking use case, as it advances the financial services beyond credit report data to achieve its mission of helping everybody move their finances forward.

Making people’s data work for them, not against them

Following the launch of its Monitor tool and series of lender API integrations, TotallyMoney has announced a third open banking use case. The new tool provides customers with live insights into their affordability, giving them an improved understanding of their own finances, and lender decision-making.

This follows recent analysis from the personal finance app, which found that the UK’s financially under-served population has grown by 3.14 million, to 23.34 million in just two years. This represents almost one in two UK adults (45%), with key drivers behind the growth including:

1. People’s finances: High inflation has squeezed disposable incomes, and with 7.4 million adults feeling heavily burdened by their bills, 5.5 million have missed a payment†. People are becoming increasingly reliant on credit, with card balances ballooning‡ and BNPL usage booming§.

2. Credit crunch: Higher rates, tighter regulation, and customers struggling to keep up with commitments have led to lenders pulling products, restricting who they lend to, and hiking fees and rates. In particular, this has impacted the near prime and subprime populations, and as such, more than nine million adults have been declined for credit in just 12 months#.

3. Credit reports: Credit reports haven’t evolved with rapid changes in society, and as such fail to fully recognise renters, gig workers, the self-employed, and those with little or no credit history (thin files), including young adults, and those who are new to the country. But credit report data still remains the backbone for most lending decisions, meaning millions of people are being left behind through no fault of their own.

The under-served population was first tracked in 2016, and was then estimated to be 13.6m peopleΔ. Since then, it’s grown by 71.3%, to 23.3 million. And with many now at greater risk of missing payments, being rejected for credit, or damaging their credit files, the worry is that this trend will continue.

By connecting an account via open banking in the TotallyMoney app, customers can gain a better understanding of the information financial institutions have access to, and how they use it. This feature also provides a personalised plan, so the customer can see which affordability factors need improvement, helping them to unlock better borrowing options.

Alastair Douglas, CEO of TotallyMoney comments:

“Our latest calculations estimate that 23 million people are now locked out of accessing mainstream credit — an increase of 3 million in just two years. And the cost of living crisis, a consumer credit crunch, and the banking system’s inability to keep up with changes in society are three key drivers behind this growth.

“Fintech has the power to help people get their finances back on track — and the new Labour government must harness that to kickstart and grow the economy. The FCA recognises the issues with credit reporting in its Credit Information Market Study. And it’s time for action and collaboration, so we can create a system which works for everybody. Only then will people be able to spend, save, and borrow in a way which is fair and transparent.

“Open banking data is a considerable improvement on the traditional credit reporting system. And our new affordability insights feature marks our third use for it, following the launch of the Monitor tool, and open data decision making we’re enabling for our lending partners.”