Applying
How affordability checks work
Income verification, outgoings analysis, open banking data — what lenders actually assess and what to do if you're turned down.
6 min read → Technology
What is open banking —
and how do lenders use it?
Open banking lets you share your transaction data securely with lenders, helping them assess affordability faster and more accurately than ever before.
5 min read • Cash Train editorial team
What open banking actually is
Open banking is a regulated system that lets you share read-only access to your bank account data with authorised third parties — including lenders, budgeting apps, and comparison services — through a secure, standardised connection.
It was introduced in the UK in 2018 following an order from the Competition and Markets Authority (CMA). The nine largest UK banks were required to build Application Programming Interfaces (APIs) that let customers share their data safely with FCA-authorised third parties. It is overseen by the Open Banking Implementation Entity (OBIE) and regulated under the Payment Services Regulations 2017.
The key point about consent
You are always in control. Open banking only works when you actively grant permission. The lender cannot pull your data without you completing a consent journey on your bank’s own website or app. You can revoke access at any time, directly through your bank.
How it works in practice
When a lender asks you to share your bank data, the process typically looks like this:
1
You apply for a loan
You complete an application on the lender’s website and are offered the option to share bank account data.
2
You choose your bank
You’re redirected to a secure screen and select your bank from a list of participating institutions.
3
Your bank authenticates you
You log in to your bank directly — using your usual security credentials. The lender never sees your password.
4
You grant permission
You choose which account(s) to share and for how long. Typically 90 days of transaction history.
5
Data is shared securely
Your bank sends a structured, read-only data feed to the lender via an encrypted API. No one logs in to your account; data is transmitted automatically.
6
The lender analyses it
Automated software categorises your income and outgoings and feeds results into the affordability assessment — usually within seconds.
What your lender can — and cannot — see
Understanding exactly what is shared helps you feel confident about the process.
What lenders can see
Transaction history (typically 90 days)
Regular income credits (salary, benefits)
Standing orders and direct debits
Spending categories (groceries, gambling, subscriptions)
Account balance at the point of sharing
Loan and credit card repayments going out
What lenders cannot see
Your online banking password
Your PIN or security credentials
Data from accounts you did not share
Savings accounts (unless you add them)
Credit card statements held at a different bank
Any ability to move or authorise payments
Open banking is strictly read-only. No lender, no app, and no third party can initiate a payment or transfer from your account through open banking. Only you can do that, via your bank directly.
How open banking speeds up affordability checks
Traditional affordability assessments rely on what you tell the lender: your stated income, your estimated monthly outgoings, how many dependants you have. Open banking replaces much of that with what your bank account shows.
Worked example — Liam, 28, Manchester
Liam applies for a £400 loan repaid over 3 months. Rather than uploading three months of payslips and bank statements manually, he grants open banking consent. Within seconds, the lender’s software confirms:
- Salary of £1,850 credited on the 28th of each month for the past 3 months
- No active payday loan repayments visible
- Average discretionary spending leaves sufficient headroom for the repayments
Decision returned in under two minutes. No document upload required.
Without open banking, the same assessment might require the lender to request payslips, wait for manual review, and follow up with questions — a process that could take days. Open banking compresses that to seconds, and the data is more reliable because it comes directly from the bank rather than a self-reported form.
Your privacy and how to protect it
Open banking is governed by UK GDPR and the Financial Conduct Authority (FCA). Any provider that accesses your data must be registered on the FCA’s Financial Services Register as an Account Information Service Provider (AISP). You can check any provider at register.fca.org.uk.
Worked example — Sophie, 34, Bristol
Sophie used open banking when applying for a short-term loan six months ago. She now wants to revoke access. She logs in to her Barclays app, navigates to “Connected apps”, finds the lender’s entry, and taps “Remove access”. The data connection is severed immediately — the lender can no longer retrieve her transactions.
Data already processed during the loan application may be retained by the lender under their privacy policy, but no new data can be accessed after revocation.
Only share with FCA-registered firms
Check the FCA register before consenting. Legitimate open banking providers are listed as AISPs.
Set an expiry on access
Most bank apps let you grant access for a defined period (30, 90 days). Choose the shortest that meets the lender’s needs.
Review connected apps regularly
Most UK banks have a “connected apps” or “open banking” section in the main menu. Review it every few months and remove any you no longer recognise.
Read the privacy notice
The lender must tell you exactly what data they access, how long they retain it, and whether they share it with third parties. This is a legal requirement under UK GDPR.
Is open banking the same as screen scraping?
No — and the distinction matters. Screen scraping (also called credential sharing) is the old method where you gave a third party your actual banking username and password. They would log in as you to read your transactions. This practice is now prohibited for regulated firms in the UK under the Payment Services Regulations 2017.
Open banking uses secure APIs. Your credentials never leave your bank. If a service asks for your banking password, do not proceed — this is not open banking and may be fraud.
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Common questions
FAQ
Open Banking is a secure, regulated system that allows you to share read-only access to your bank account transaction data with authorised third parties — such as lenders — through a standardised API. In the UK it is regulated by the Financial Conduct Authority and built on the PSD2 directive.
Yes. Open Banking connections are read-only — a lender can see your transactions but cannot initiate payments or access your login credentials. Connections are made through your bank's own secure interface, and you can revoke access at any time. Data is encrypted in transit.
Open Banking is available as part of our application process and can speed up affordability checks by replacing the need to upload paper bank statements. It is not mandatory — you can still provide bank statements if you prefer. Open Banking access is read-only and can be revoked at any time.
A lender can see your transaction history — income deposits, regular outgoings, existing debt repayments — over recent months. This helps build a picture of your income pattern and committed spending without you having to manually download and upload statements.
Yes. Open Banking always requires your explicit consent. If you decline, we may ask you to submit paper bank statements instead, or we may be unable to proceed with your application. There is no obligation to use Open Banking — it is offered because it can speed up the assessment, not because it is required.
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