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How Nationwide is using open banking to help the ‘financially squeezed’

Wed Jul 31, 2019
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Last year Nationwide launched a groundbreaking initiative to help the UK’s ‘financially squeezed’, working with fintechs and charities, and investing £3m to create useful tools and services

Last year Nationwide launched a groundbreaking initiative to help the UK’s ‘financially squeezed’, working with fintechs and charities, and investing £3m to create useful tools and services. 

ODI’s Head of Marketing and Membership Hannah Foulds spoke to Nationwide’s Rachael Sinclair, Director of Strategic Planning, and Phil Gosset, Senior Innovation Manager, about the new Open Banking for Good initiative. 

Rachael will be speaking at the ODI Summit on 12 November.

Hi Rachael, hi Phil. What exactly is Open Banking for Good?

Open Banking for Good came out of a conversation between Nationwide’s CEO Joe Garner and the Inclusive Economy Partnership (IEP) where the company was challenged to find a way to use open banking for social good. So, our CEO Joe Garner said, “challenge accepted”. He put aside £3m fund from Nationwide, and the organisation went on to engage charities and organisations to find out the main challenges that ‘financially squeezed’ people face in the UK, and how to address them. They then engaged fintechs through a challenge to come up with solutions.

We then discovered three main challenges:

  • Difficulty completing the income and expenditure form (what creditors usually ask for in order to extend credit) – only a small amount of applicants make it through to the end
  • Increased numbers of gig workers who spiral into debt due to irregular income (this is called ‘income smoothing’)
  • Cognitive overload – the financially squeezed are often great budgeters but struggle to think longer term than their current situation, so need help with seeing the bigger picture.

“We’re hoping to be able to show the value of open banking and get solutions into the hands of the people who need it most.”

What do you hope Open Banking for Good will achieve?

One objective is to gather organisations that wouldn’t naturally come together to drive social good. We’re bringing Nationwide together with commercial organisations, fintechs and learning organisations such as Bristol University. We can build confidence through proof points of the value of open banking for end-users. We’re hoping to be able to show the value of open banking and get solutions into the hands of the people who need it most.

We are of the opinion that open banking is one of the most transformational things that will happen to our sector because it’ll drive transparency and harmonise standards.

Why is Nationwide doing this, why not someone else?

We’re uniquely placed to do this work because it fits our core values and existing relationships. Our focus on social good has been a real facilitator with the fintechs and charities. We’re delighted to have received 50 applicants into the challenge, beating our expectations.

“We are making a difference to the lives of people who are financially squeezed, and this is what gets me up every morning”

What have been your main challenges?

At the crux of open banking is people agreeing to give consent for data about them, but for a long time the banks have been saying ‘don’t share your personal data’. Open Banking allows you to share data safely, without having to do anything with it. But users want to know the reasons for sharing their data; we’ve so far been having the conversation about Open Banking without talking about the impact on the end user.

Also, we’re engaging with fintechs who work at an agile pace. We’ve had to ensure that Nationwide is as agile as them, and not a barrier. You need to give autonomy to be able to run at agile pace, and allow them space to work with a level of dynamism.

Another challenge has been getting people to understand why we’re doing this and our motivations behind it. There isn’t a big financial prize at the end – unlike most financial challenges – so we’ve had to get people to understand that it’s purely for the good of our members. This has been the hardest thing to overcome. It’s amazing, we often get asked “what’s in it for Nationwide?”, and we say it’s just for social good. We’ve been very open-handed and open-hearted about it, and that’s why we’ve had such good engagement. They’re responding in-kind.

Internally, we’ve been sponsored from the top – our board, CEO and executive team who are absolutely standing behind it as a strategic priority, and our whole team is standing behind it, so this hasn’t been an issue.

We’ve also had to show integrity in solutions we’re building, thinking about data ethics and showing evidence that we’re thinking this through.

“We’re engaging with fintechs who work at an agile pace. We’ve had to ensure that Nationwide is as agile as them, and not a barrier”

What do you see it achieving in a year’s time?

Closer than that! By end of April 2020, we will have placed solutions into the hands of our members. We’re hoping to land a blueprint of how to take forward these challenges in the future, bringing fintechs, commercials and charities together.

We’re committed to continuing with it, but we need to prove we’ve achieved outcomes in the first year. Naturally we’re keen to persist, whether it’s us or the IEP we’re not sure – but we’re getting feedback from the fintech community.

“It’s having a large organisation give us the mandate that is for social good, and that’s genuinely for social good and not just a PR exercise or corporate social responsibility.”

Do you think other organisations will do something similar?

We want to motivate other organisations to do a similar thing. We’ve had lots of interest from other organisations, but we’re focused right now on  making our project successful and getting external validation.

What personally excites you about it?

Phil:  It’s having a large organisation give us the mandate that is for social good, and that’s genuinely for social good and not just a PR exercise or corporate social responsibility. It’s an extension of the core values of our organisation and a demonstration of those values. Like a stick of rock, it runs right the way through.

Rachael:We are making a difference to the lives of people who are financially squeezed, and this is what gets me up every morning. It is also stretching my leadership. Now that I’m working with fintechs, I’m having to re-frame my style – from jotting ideas on a piece of paper to developing mature solutions – and having the chance to stretch is really exciting.

How can people get involved?

We’d encourage people to take a look at our website [www.openbankingforgood.co.uk / www.bb4g.co.uk] to watch our charities give some context around the challenges we’ve set and why they’re important. They’ll give you a deeper understanding of what we’re trying to achieve and why it’s important.

Rachael will be speaking at the ODI Summit on 12 November. Read more about open banking and the ODI’s role in it here.