Traditional lending models are broken in current economic climate, says Tink

29 September 2022: Europe’s leading open banking platform Tink is urging lenders to prioritise upgrading creditworthiness assessment models to ensure more accurate lending decisions.

  • New findings from Tink show that a significant number of UK lenders have not yet adopted affordability assessment models that would create fairer, better lending processes 

  • Half of UK lenders (50%) are still not using technology to generate a credit score based on bank account data 

  • Today's economic climate requires more stringent affordability assessments than the traditional lending models used

  • Tink urges industry to unlock fairer, more inclusive affordability checks that support consumers and businesses amidst the cost of living crisis

Traditional lending models are broken, and against a backdrop of the cost of living crisis, a blinkered view of income and expenses is no longer fit for purpose. As the economic crisis worsens, better decisions on lending are needed to protect and support consumers and businesses who might be struggling with affordability over the coming months, while reducing the risks to lenders from a potential new wave of defaults.

Inadequate adoption of new models

According to Tink’s 2022 survey of financial executives, two-thirds (68%) of UK lenders have tightened affordability criteria since the pandemic, but blind spots still exist in their credit assessments. This has led to some people being denied access to borrowing unnecessarily.

For example, UK lenders say that some of the main reasons that people are denied credit include the inability to verify identity or legal status (41%) or the inability to access payment history (35%). Mirroring these findings, another Tink study finds that UK consumer cohorts are also citing unfair assessments, as a third (33%) of self-employed workers say their employment status has been an obstacle for them getting a mortgage, and a further 31% believe it has hampered their ability to obtain credit.

The ugly truth for consumers and lenders alike

This research unveils two stark truths about traditional underwriting methods, firstly some people who can afford credit are being excluded because of outdated and blinkered credit scoring models. And the static, retrospective nature of traditional credit checks means there is no robust way of protecting consumers if economic circumstances change and affordability becomes an issue.

UK lenders can adopt new open banking powered affordability assessment models which anticipate future affordability, using up-to-date, holistic data. Lenders can therefore make better decisions that take into account expenses and incomes such as housing costs, loan payments, insurance, utilities and transportation.

Currently, 50% of lenders are still not using this technology to generate a credit score based on transaction data, while more than a third (35%) are not using it to assess expenses and overall affordability. Yet encouragingly, Tink’s findings indicate a growing appetite to embrace open banking powered technologies, with 41% planning to adopt digital solutions for data-driven credit scoring.

Tasha Chouhan, UK & IE Banking and Lending Director at Tink commented:“It’s clear many lenders still rely on traditional credit checks to determine eligibility for loans. There is no place for such models in our current economic climate, and the sooner this is recognised, the better the outcome will be for both lenders and consumers.”

“New forward looking models are drawing on open banking technology to provide a holistic picture of people's finances. It’s vital to protect potentially at risk or vulnerable consumers from problem debt or default as the economic climate worsens. At the same time, it’s key to promoting financial inclusion, as people now more than ever need access to safe, affordable and regulated borrowing options.”

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Notes to editors:

Contact details:

Linda Winder, PR & Communications Director,, +46 8 509 08 999

About the research

The research was conducted by YouGov on behalf of Tink between 7 February and 31 March 2022, amongst 380 financial services executives spread across 12 European countries. Interviews were conducted via telephone calls and online questionnaires, with senior decision makers employed by regulated financial institutions.

About Tink:

Tink is Europe’s leading open banking platform that enables banks, fintechs and startups to develop data-driven financial services. Through one API, Tink allows customers to access aggregated financial data, initiate payments, enrich transactions, verify account ownership and build personal finance management tools. 

Tink connects to more than 3,400 banks that reach over 250 million bank customers across Europe. Founded in 2012 in Stockholm, Tink became a wholly owned subsidiary of Visa in 2022. Tink’s 500 employees serve more than 300 banks and fintechs in 18 European markets, out of offices in 13 countries. We power the new world of finance. 

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