Assessing vulnerability is one of the most pressing challenges facing local authorities today. Yet, many still rely on static indicators, such as postcode,
benefit status, or historic income, that only paint part of the picture.
These data points often miss the subtle, daily indicators of financial pressure.
What’s often missing is a live view of someone’s financial circumstances. Open Banking can help bridge this gap.
By enabling secure, consent-based access to real-time transaction data, Open Banking allows local government teams to assess affordability based on how
residents are managing their money today, not months ago. This paves the way for earlier interventions, more accurate assessments, and better allocation of support.
Where current assessment models struggle
Despite best efforts, many local councils are working with limited data. Traditional affordability checks often hinge on assumptions or dated records,
which don’t always reflect the complexity or immediacy of a resident’s situation.
Some of the most common gaps include:
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Lagging income data: Employment changes or income drops may not be visible for months.
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Blind spots around essential outgoings: Regular expenses like rent, energy bills, or childcare costs aren’t always captured.
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Irregular or informal income streams: Self-employment, gig work, or cash-based jobs frequently fall through the cracks.
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Lack of early warning signs: Without day-to-day visibility, it’s hard to identify residents who are struggling just below the surface.
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Manual, time-intensive processes: Many assessments rely on paperwork, self-declared forms, and retrospective reviews.
As a result, some residents may not receive the support they need, while council resources remain under pressure.
Bringing affordability checks into the present
Open Banking data can fill these gaps by offering a secure and real-time view of income, spending, debt obligations, and cost-of-living pressures. Instead
of relying solely on paperwork or estimates, local authorities can use permissioned data to inform decision-making, without increasing the burden on staff or residents.
This approach also reduces risks related to document fraud or human error, enabling faster and more consistent outcomes.
How Open Banking supports local authority work
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Benefit
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Impact
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Live income and spending insight
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Move away from outdated data and see real financial behaviours.
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Early identification of risk
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Spot patterns like overdraft use or missed payments before crisis hits.
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Evidence-based decisions
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Replace assumptions with real affordability metrics.
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Support for complex income types
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Understand fluctuating pay from zero-hours contracts, gig work, and more.
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Simplified processes for residents
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A mobile-friendly link replaces document uploads, making support more accessible.
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Real-world applications in public services
Some local authorities have already seen meaningful results from using Open Banking data across a range of services. It’s helping to:
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Target support more precisely
Councils can pre-assess eligibility for council tax reductions, hardship grants, or housing support based on real affordability data. -
Detect financial strain earlier
Early indicators such as irregular income, credit dependency, or late payments help teams identify emerging issues before they escalate. -
Allocate resources more effectively
With clearer insights into who’s struggling—and how much—funds can be directed where they’ll have the greatest impact.
As one Citizens Advice CEO described, this approach enables advisors to access financial circumstances in real time, reducing friction and helping residents
act sooner.
Integrating new data without disruption
A common concern for councils is the perceived difficulty of adopting new data sources. In practice, many Open Banking solutions are designed to integrate
with minimal disruption. They often operate alongside existing systems, enriching the context behind decisions without requiring structural change.
By incorporating live income and spending data into their processes, local authorities can also better support individuals who may not be visible in traditional
datasets, such as carers, low-income households with irregular earnings, or those with limited credit history.
A data-driven step toward fairer support
As councils continue to digitise and modernise their services, Open Banking presents a practical and effective tool for improving affordability assessments
and supporting financial inclusion. With the right safeguards and processes, it’s possible to build a more responsive model that identifies need sooner and supports residents more effectively.
