FinTech: UK Reportedly Leads In Open Banking
Let’s forget, if we can, the nonsense and instability surrounding the UK and its politics. Looking at FinTech as a separate village industry, the UK’s sector offers shelter, harmony and peace. More or less, anyway.
The UK has taken the top spot in a league table ranking open banking adoption among European countries.
The research, from open banking infrastructure provider Yapily, ranked 18 European countries on a 10-point scale according to the maturity of open banking in each market.
The research assessed factors such as local regulatory oversight and enforcement, the digital readiness of the population, domestic payments infrastructure, bank integration, the presence of third-party providers (TPPs) and API performance and standardisation.
The news comes after the OBIE revealed in June at AltFi’s Open Banking Forum 2022 that open banking payments are growing 500 per cent YoY in the UK, with a record 6m users now using open banking.
Yapily’s research found that the UK is among the most advanced countries in Europe when it comes to enabling APIs for third party payments providers (TPPs) to utilise, as well as processing the largest number of API calls and payment volumes over the last 12 months compared to its European neighbours.
Yapily’s research also praised the role of the UK’s Faster Payments System in terms of speeding up the process of sending and receiving money via bank-to-bank transfers and enabling open banking payments to accelerate at speed.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
That figure is the result of over £24 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
- Money&Co. has been lending for over 7 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.
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