Councils provide more than 800 local services, from looking after vulnerable people and to building stronger and safer communities.
As demand for services keeps increasing, core funding from Central Government has fallen dramatically over the last decade. According to recent research by the Local Government Association (LGA); 38% of Council funding comes from Council Tax, 34% comes from sales, fees and charges and 20% comes from Business Rates. Only around 9% now comes from grants.The pandemic has added to these challenges by generating additional extraordinary financial pressures in local government.
To secure the long-term sustainability of local services and to support communities, councils need a strong and certain financial foundation.
Next-generation solution: Open Banking
Open Banking has opened up a world of possibilities for the payments landscape. By using verified information, Open Banking enables direct and instant payments between two bank accounts with much less risk of error or fraud. No input of sensitive data (such as card details) is required when making a payment.
Open Banking payments can be used for a variety of transactions, allowing councils to initiate instant and direct account-to-account payins and payouts, for example:
- Demand notices
- Service bills
- PCNs (penalty charge notices)
- Rent payments
- Welfare support and discretionary funds
Open Banking can also bring in many data capabilities, such as instant confirmation of account ownership or income verification, providing local authorities with fully accurate financial information extracted from a citizen’s verified bank account data. This technology introduces many key benefits that can transform the way local authorities work:
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