What Is Open Banking?

Open Banking refers to the process of banks and other financial institutions opening up data for regulated providers to access, use and share. But what does this mean for you and your business loan application?

What is Open Banking?

Open Banking is a secure way to share information held by your bank with third party providers to:

•  Get access to personalised financial offers

•  Make payments

•  Get a payment card issued by a third party (i.e. not your bank)

Can everyone use Open Banking?

Open Banking was introduced to make it easier for individuals and businesses to shop around for financial products. Most Banks participate in the scheme, but you will need to have an online or mobile bank account to take part.

What information is shared?

Consent for Open Banking is driven by you. You control who can see your information and what information you are willing to share. Most lenders request only the most basic access which is the transactions on your account(s). The information they see goes back over a 12-month period and shows credits and debits, dates, balances and references. This is shared as a snapshot, which the lender can store in line with their Privacy Policy and GDPR regulations, whilst they process your application.

To be clear, they can see the information but not access your actual online account, and at no point do they have visibility of any password or security details.

Why does a lender need this information?

Being a responsible lender means checking the suitability and affordability of any potential business loan. This can be done by looking at banking data. Traditionally, this has been done by requesting 3-6 months of Bank statements. Open Banking gives a slightly wider picture (12 months) allowing the lender to look beyond any seasonality/cyclicality effects on your cashflow. It also takes away the need for you to scan and send information via less secure means such as pdfs and emails.

Does it cost anything?

No, there is no charge for open banking.

Can you still apply for a business loan if you refuse to give Open Banking consent?

Our lenders in no way wish to disadvantage any customer from making a business loan application. If your bank does not offer Open Banking, you do not have an online account or simply decide that Open Banking is not for you, then you can provide paper statements as an alternative.