Solvency and Open Banking: the new Solutions Newsroom

6 Marzo 2023 - 15:18

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Knowing the reliability of debtors and their solvency is essential for companies, which today can count on a precious ally: open banking. Ikea leads the way.

Solvency and Open Banking: the new Solutions

Open banking is undoubtedly one of the most interesting innovations of recent years. Thanks to its arrival, after the entry into force of the new European Payment Services Directive (PSD2), providers of financial services have been able to start counting on innovative technologies, first of all APIs.

One of the main innovations brought about by open banking was undoubtedly the possibility of having greater transparency, which represents a great possibility for many companies, which can now get to know better those with whom they trade or their own customers .

The companies, in particular, can know the solvency of their debtors, i.e. their ability to pay their debts. Imagine being a supplier and having a possible customer at your door who wants to buy a certain quantity of goods from you, paying it in installments.

Before granting this form of payment to the new customer, you will rightly want to have guarantees, i.e. to know whether or not he is capable of paying off his debt. Thanks to open banking and big data this is now possible through some software. Let’s see in particular how this novelty works.

Open banking can help companies check the creditworthiness of customers

By adopting open banking, through software it is possible to know the financial history of those who request financing or loans. The first thing companies need to know is whether or not their debtors are able to repay what they owe; and if so, to what extent.

This is possible thanks to the large data bases made available by open banking and analyzed through complex algorithms. Thanks to them, companies can know the fixed expenses and variables of the debtor, so as to have a clear picture.

Furthermore, thanks to open banking, it is possible to know specifically how much the debtor earns, be it a company or an individual. Some software are even able to analyze the debtor’s expenses, and then divide them into various categories. In this way, lenders can quickly have a well-defined scenario on the debtor’s expenses and modus operandi.

Another important opportunity made available to open banking is to intervene before a scenario arises in which the debtor is unable to pay.

In this way, companies have the possibility to implement countermeasures to help the client and at the same time safeguard their portfolio. Finally, thanks to some API it is possible to constantly monitor the cash flow incoming and outgoing of the companies with which you trade, so that it is always possible to know what their state of health is.

Ikea invests in DirectID to monitor customer creditworthiness

All the innovations brought about by open banking in the field of debt solvency have been incorporated by DirectID, a Scottish startup capable of monitoring the ability to repay the debts of a company’s customers, both they are companies (B2B) or natural persons (B2C).

In this reality, Ikea, through Ingka Investments, has invested about 9 million euros. In this way DirectID can continue to grow, while Ikea will have the possibility to integrate the software into its operating system, so as to be able to decide faster and more effectively which suppliers to do business with, which customers to grant loans or advantageous payment methods, such as the BNPL for example.

Original article published on Italy 2023-03-01 10:00:00. Original title: Solvibilità e open banking: le nuove soluzioni

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