Open banking's first act was fundamentally a payments story. Account information services, payment initiation services, premium APIs for money movement: the initial PSD2 ecosystem organised itself around transaction data and instant payment rails. It was valuable, but it was only half of the financial system.
The second act is about credit. And it is going to be substantially more commercially significant than the first.
The logic is straightforward: the data that open banking provides — transaction history, income patterns, spending behaviour, balance trajectories — is precisely the data that traditional credit underwriting has always lacked. Bureau scores are backwards-looking lagging indicators built on a narrow slice of financial behaviour. Open banking data is real-time, forward-looking, and holistic. For the right infrastructure, it changes what credit decisioning is even capable of.
The Credit Infrastructure Gap
The infrastructure layer that connects open banking data to credit decisions is underdeveloped relative to the payment initiation stack that preceded it. This is partly a product of complexity: credit decisions require enrichment, normalisation, and risk modelling at a depth that payment confirmation does not. Building a reliable, production-grade credit intelligence layer on top of open banking data requires financial domain expertise that pure technology companies often do not have.
It is also a product of timing. PSD2 account data has only been available at reasonable quality and coverage for about three years. The first generation of open banking credit companies spent that period building proprietary data pipelines. The second generation — the one that will achieve category scale — is beginning to emerge now, equipped with better APIs, richer data, and three years of evidence about what actually predicts credit performance.
"The companies that will dominate open banking credit infrastructure are not the ones that started in 2019. They are the ones starting now, with the benefit of three years of empirical data about which signals matter and a regulatory framework that is, for the first time, genuinely supportive."
Three Credit Infrastructure Markets
Consumer Affordability and Income Verification
The most mature segment of the open banking credit stack is affordability verification. Using transaction data to confirm that a borrower has the income and expenditure profile they claim in a loan application has become near-standard practice among UK lenders, and is rapidly gaining adoption across the EEA. The infrastructure requirement here is integration depth — the ability to connect to the largest possible number of banks with the highest quality of data — rather than analytical sophistication. The competitive moat is coverage, not cleverness.
Dynamic Credit Scoring for SMEs
The more interesting commercial opportunity is in SME credit. Traditional credit bureau data is particularly weak for small businesses: the separation between business and personal finances is often incomplete, credit histories are short, and the revenue patterns of SMEs — seasonality, irregular invoicing, lumpy cash flows — are poorly handled by models built for consumer credit. Open banking data, interpreted by a domain-aware model, can produce credit scores for SMEs that are not merely better than bureau-based alternatives; they are better by a factor of two or three in default prediction accuracy.
Embedded Credit in B2B Platforms
The most structurally interesting segment is embedded credit: the integration of credit decisioning directly into the software platforms where SMEs manage their businesses. An ERP system that can pre-approve a working capital facility based on real-time open banking data, without the borrower leaving the platform, is not just a better credit product; it is a new kind of financial product that was impossible before open banking data was available at quality and scale.
What We Are Looking For
Our investment thesis in this space is focused on infrastructure rather than lending. We are not looking to back balance sheet lenders; we are looking for companies building the credit intelligence, decisioning, and distribution layers that other lenders use. The infrastructure companies in this stack will be defensible, capital-light, and highly scalable — the characteristics that produce exceptional venture returns in financial services.
Specifically, we are interested in: companies building open banking credit enrichment APIs; decisioning engines that combine bureau data with open banking data in a single underwriting workflow; and embedded credit infrastructure that can be white-labelled into B2B software platforms. If you are building in any of these areas, we want to meet you. Get in touch.