Using open finance data to democratize financial advice



There is a gap in the world of wealth creation, and you, dear reader, may have already fallen into it. 

Few bridge the chasm between accessing financial advice and fulfilling potential value. A recent FCA study found that 54% of UK adults with £10,000 or more of investible assets, around 8.4 million people, did not receive formal support to help them make investment decisions.

In addition, 50% of those 8.4 million people had very few or zero investments, holding most of their wealth in cash. 

The Bank of England showed that during the pandemic, UK households’ instant access savings balances had grown to almost £1 trillion. This, in addition to term deposits, current accounts, and cash ISAs, brings the total value of cash savings to £1.7 trillion. 

Managing this cash are six major commercial banks, holding 90% of current accounts and 70% of savings accounts. All with minimal interest rates, growing the wealth of their consumers at a snail’s pace. 

 Ben Harvey, co-founder, and CPO of Pennyworth
Ben Harvey, co-founder, and CPO of Pennyworth

“This tells us that the traditional banks have still not been truly challenged, with the majority of balances being retained and profits of these banks remaining high,” stated Ben Harvey, co-founder, and CPO of Pennyworth. “It highlights that there is still a problem of unrealized value by UK consumers.”

To some, it is clear that there is still much to be done to access UK households’ full potential wealth, restricting the economy. At a time when the cost of living is at an all-time high, innovation could be critical.

Limited access to advice

The issue may lie in access. Many personalized financial advisory services are geared to customers with a value of investible assets well above £10,000.

Despite many of the consumers from the FCA survey reportedly not believing they need financial advice, results also showed that there isn’t much on offer to meet their needs should they want to engage in their finances. 

Although some development has been made, according to the FCA, businesses still need to expand, providing tailored, simple solutions that merge generic facts with ongoing holistic advice. 

In the report, the FCA stated, “We want to see a market that offers a broader range of consumer support services, so people can find the right support for their needs that gives them the confidence to invest. This would be good for consumers, good for the industry, and help to support the wider UK economy.”

Steps in open banking and open finance could make the desire of the FCA a reality. Combining access to the full scope of each customer’s financial profile with automation could birth solutions to personalize facts to the individual’s goals. 

Pennyworth democratizes financial advice

In response to these findings, Pennyworth, a financial planning and banking app, has focused on improving the ease of access to personalized financial advice.

The app is aimed at “aspiring-affluent consumers,” those with salaries ranging from £40,000-£150,000/annum, who, although they would benefit from financial advice, are not usually considered wealthy enough by banks and wealth management firms to be taken on. 

They partnered with open data veteran, Moneyhub in July 2022, to further enrich their solution, using their connectivity within the UK.

David Tong, CTO of Moneyhub
David Tong, CTO of Moneyhub

The APIs provided by Moneyhub have been built over 10 years using open banking and financial data. “It’s about bringing all sorts of financial and other data into one place, enriching that data, and then providing a great end-user experience,” said David Tong, CTO of Moneyhub.

“In the UK, we’ve got the biggest number of connections; we are connected to various pension funds, investment, funds, loans, all that sort of thing. Then the data is enriched, and we have a community-based machine categorization algorithm. We have a lot of good training data, so it’s a mature solution.” 

This breadth of data can provide a holistic picture of the customer’s financial position, making it easier to automatically impart relevant advice and customized financial plans while tracking progress.  

“Pennyworth was founded to help solve the personal finance problems of aspiring-affluent customers by bridging the value and advice gap,” said Jeremy Takle, CEO of Pennyworth. “Moneyhub’s cutting edge technology helps us achieve that goal.”

  • With over five years in the art and design sector, Isabelle has worked on various projects, writing for real estate development magazines and design websites, and project managing art industry initiatives. She has directed independent documentaries on artists and the esports sector and assisted in producing BBC Two’s Venice Biennale: Britain’s New Voices. 

    Isabelle’s interest in fintech comes from a yearning to understand the rapid digitalization of society and the potential it holds, a topic she has addressed many times during her academic pursuits and journalistic career.