TCS uses open banking to help GenZ and students build credit

TCS is using open banking to help a UK high street bank enable GenZ clients and student communities in England and Wales to pay their way and build credit scores as they go.

Open banking enables banks and other financial institutions to share financial data via an application programming interface (API). The Housemate app, which uses open banking, provides a tool for those living in shared accommodations, such as students and GenZ adults often do, to pay their rent and manage housing-related payments and expenses. Housemate links to credit rating agency Experian, and it reports rental payments to build users’ credit ratings—assuming the bills are regularly paid on time, of course.

Establishing a credit score early in life allows earlier access to more formal financial services such as securing auto financing, becoming first-time home buyers, or accessing other loans from banks.

Harnessed effectively, open banking helps app users better manage their money

Open banking technology is the linchpin of the Housemate app. The appeal of the technology for app users is clear: They can split rent and pay their share of rent and expenses faster, more easily, and more flexibly. Exhibit 1 draws a parallel between the living and housing challenges in the UK and the impact of the Housemate on the community.

The Housemate app captures the ambition of the technology to extend beyond monetizing opportunities; it enables new business models through collaboration and data sharing. The app is bank-agnostic, and users can use any bank and connect through the app to make payments. The adjacent value proposition is the dissemination of data through APIs to establish credit with Experian through rental payment patterns. The result is a new service offering delivered by the high street UK bank.

Exhibit 1: Housemate serves GenZ and student needs in the context of their everyday lives

Source: HFS Research and TCS, 2023

TCS won a competitive bid to become the end-to-end partner for the Housemate proposition

TCS is the primary digital partner for the UK bank’s digital and data-led initiatives. Leveraging the pre-existing relationship and contextual knowledge, TCS brought a fresh perspective to deliver a fit-for-purpose Gen Z and student-centric offering, winning the competitive bid. TCS planned the development of the app in an iterative, controlled manner. Its successful initial focus on a well-defined segment with a small set of priorities meant TCS could launch rapidly and have room to scale incrementally. The next target is to become a marketplace that brings utility providers, homeowners, tenants, and rental agencies onto the app. The app was well received and won the “best innovation in product” and “prestigious Jury’s Choice Award for Best Innovation Product in B2C category” in Financial Services Forum’s 2023 Awards for Innovation and Transformation.

The Bottom Line: Open banking technology can manifest the most innovative offerings, streaming rich data to impact communities’ financial lives—but keep a close eye on data privacy.

The Housemate app is a new business offering for the GenZ and student communities that furthers their access to financial services. With great potential come roadblocks, however. In this case, app users need to have an online banking presence to transfer money, and open banking is available for selected UK banks and account types only.

The opportunities for BFS firms to benefit from open banking are substantial: new revenue opportunities, new segments, improved customer experience, and the creation of tailored propositions. However, to leverage open banking technology, BFS firms need the right infrastructure to build a data-sharing system and innovate. Banking and financial services firms also need to develop guardrails and governance to protect shared financial data.