The commercial credit data sharing scheme (CCDS), officially launched 1 April 2016, is now nearing full implementation. At a recent seminar for alternative lenders, hosted by Experian, experts told an audience of over 40 that the vast majority of mandated banks are now ready to share data with designated credit reference agencies. Once this begins, Experian believes it will hold credit data covering 98 per cent of small businesses in the UK.
The CCDS scheme will significantly increase the extent to which alternative lenders can access bank current account data.
Many banks already share this kind of data under a voluntary equivalent of the scheme. However, with credit data sharing typically operating on a reciprocal basis, the biggest banks had settled into a system of only sharing current account data with each other – while alternative lenders missed out.
But the next chapter in credit data sharing will change that. Going forwards, any of the three designated credit reference agencies may demand credit data from a designated bank and it must be sent within 30 days, then every month thereafter.
Once fully implemented, alternative business lenders (both peer-to-peer and balance sheet-based) will be able to access a highly granular level of current account data. This will include minimum, maximum and average balance metrics, credit turnover, debit turnover, number of rejected payments and number of days in excess. It is widely accepted that this kind of data can improve credit decisioning.
Only finance providers may access the data, and in order to do so they must have the consent of the customer. They must also have signed a data sharing agreement (and then share data themselves), agree to various terms and conditions, and respond to subject queries.
There was some confusion at the Experian seminar as to whether open banking APIs – which are set to arrive by 2018 – will replace the CCDS scheme. But Steve Fox, head of sales and fintech lead at Experian, believes that the two schemes will in fact work well together, delivering maximum transparency to end users.
Experian will be hosting a follow up seminar on open banking in June.