How digital affordability and Open Banking is revolutionising debt advice

By Dudley Barber | Oct 7, 2020 |


In July we announced that OpenWrks MyBudget had been selected by the Money and Pensions Service (MaPS) as their digital affordability assessor. With the aim of streamlining and increasing the volume of debt advice sessions consumers have access to, MaPS selected OpenWrks to power digital affordability assessments in their PACE (Pilot of Adviser Capacity and Efficiency) project. Last Wednesday we went live, working with MaPS to provide digital affordability assessments as part of their digital enhancement to debt advice.

At OpenWrks we're on a mission to help everyone understand what they can afford to save, invest, borrow and repay. We know first hand how much easier Open Banking makes processes like tracking spending and calculating disposable income. By working with PACE, we’re making leaps and bounds towards our mission by helping people access vital support and gain confidence in their finances.

What is the Pilot of Adviser Capacity and Efficiency Project?

The Pilot of Adviser Capacity and Efficiency (PACE) is a technology-focused pilot to simplify how people access and experience the debt advice journey, increasing efficiency, and to help more people in need receive free debt advice. Working with the three major UK debt charities (StepChange, Money Advice Trust, and Citizens Advice Bureau), the PACE project aims to help more people as early as possible, to understand impacts, and to improve all stages of the client journey.

Why are MaPS launching this now?

Prior to Covid, MaPS estimated that 17.2% of UK adults, approximately nine million people, were “over indebted”, meaning that their current credit repayments were the same as or bigger than their monthly income. Of these, only 32% had sought or were seeking debt advice. A combination of a gig economy, unstable working hours, low incomes, high living costs, and a lack of savings are the main contributing factors.

Covid-19 has inflamed these pre-existing issues. With 19.5million people joining the government furlough scheme, and 3.5 million on the self-employment support scheme. Meanwhile, payment holidays are also expiring, and some consumers may now have more to pay back than before.

How do people get help?

Debt advice is usually given through completion of an Income and Expenditure (I&E) budget which calculates monthly disposable income so advice can be given based on what options are the most affordable. These are usually done over the phone or through an online form.

I&Es can take up to an hour to complete, and human errors like rushing or forgetting, plus external factors like unpredictable income and unforeseen expenses can skew budgets and affect advice. What’s affordable in one month can be suddenly impossible the next, which means repayment plans fail.

Why MyBudget?

MyBudget uses Open Banking data to get a real time, accurate view of monthly income and spending. Our friendly robot Sadie then asks customers to clarify or confirm any transactions that might be repeated in the data, or any major bills that may appear to be missing. For example, if it looks like there are multiple income streams, Sadie will ask if that’s correct or if they’re one-offs. The customer gets final say on if the budget looks like their average month.

MyBudget is self-service, so customers can complete it in their own time, at their own pace, and without the discomfort of talking it through with a stranger. No mental math or tracking down old statements, bills, and payslips because MyBudget does it all for them. By reducing anxiety and human error, MyBudget has been proven to lead to more sustainable advice and plans.

A final word from me...

It has been a true collaboration between MaPS, the debt charities and OpenWrks to create a new client journey using MyBudget. The fact we’re now live is incredibly exciting for everyone involved. This partnership will enable charities that are part of the PACE pilot, for the first time, build client budgets using Open Banking. Through this process we will be able to learn how Open Banking can bring better, more efficient, more sustainable debt advice to anyone who needs it.

And from Daniel Kelly, Coordination and Engagement Manager at the Money and Pensions Service:

“The PACE project ultimately aims to serve customers better as well as increasing the volume of debt advice provided in the sector, which is even more important in the wake of the coronavirus pandemic. The successful introduction of the Standard Financial Statement has helped debt advisers to assess a customer’s incomings and outgoings in a consistent way across the sector. Now we are looking forward to building on this through exploring the use of Open Banking data with OpenWrks, seeking to increase the ease, accuracy and speed of the process so customers receive debt advice that is best tailored to their circumstances."

More about the author...

Dudley is Head of Operations at OpenWrks Group, where he helped launch and scale Tully, the first digital debt advice platform using Open Banking. Dudley is also project lead for OpenWrks on the PACE project, working with the Money and Pension Service (MaPS) and debt advice charities to implement and test Open Banking. Dudley's had a long career in finance, including leading the collections and recoveries operations for Capital One and programme managing a number of transformation projects. You can find Dudley on LinkedIn here.

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