2 min read
What Open Banking data reveals
When a company director grants consent through an Account Information Service Provider (AISP), the lender receives a structured feed of every transaction across the connected accounts — inflows categorised by payer, outflows by payee and category, opening and closing daily balances, and overdraft usage patterns. This provides a granular picture of cash flow that filed accounts, which may be twelve to eighteen months old, cannot replicate.
Lenders use the data to verify revenue claims against actual receipts, assess the regularity and predictability of income, identify existing loan repayments or direct debits not disclosed in the application, and detect patterns — such as frequent month-end overdraft peaks — that suggest the business is operating closer to its liquidity limits than headline figures suggest.
How the underwriter interprets transaction data
Automated categorisation engines process the raw transaction feed and generate cash flow metrics: average monthly receipts, revenue volatility month-on-month, the ratio of payroll to total outgoings, and the frequency of returned direct debits or unarranged overdraft charges. These metrics feed directly into the lender's affordability model alongside the traditional financial ratios derived from accounts.
Behavioural signals within the data also inform the credit assessment. A business that consistently maintains a positive end-of-month balance, makes supplier payments on time without frequent deferrals, and shows stable or growing monthly receipts is treated differently to one with erratic balances, repeated referral charges, or a pattern of delaying PAYE and VAT payments — even if both report similar annual EBITDA figures.
Consent, data security, and access duration
Open Banking consent is given explicitly by the account holder and is time-limited. Under UK Open Banking standards, ongoing access tokens expire after 90 days and must be renewed with fresh consent. Lenders using Open Banking for a one-off credit decision typically request a single 90-day read; those offering revolving facilities or monitoring covenants may seek renewable consent for the duration of the facility.
The lender cannot initiate payments or move funds through an AIS connection — that would require a Payment Initiation Service (PIS) consent, which is a separate and more sensitive authorisation. Directors should check the consent screen carefully to confirm they are granting only account information access.
Implications for businesses applying for finance
Because Open Banking data can accelerate a credit decision and reduce the documentation burden — in some cases eliminating the need to submit paper bank statements — it is generally in the applicant's interest to grant consent promptly. Gaps in the data, such as a business that splits trading across multiple accounts but connects only one, can create an incomplete picture that leads to a more conservative assessment. Directors should connect all active trading accounts when granting Open Banking consent to ensure the lender sees the full financial picture.
Frequently asked questions
Is Open Banking data shared with credit reference agencies?
The transaction data retrieved via an AIS connection is not automatically reported to credit reference agencies. However, the credit search triggered by the application itself is typically recorded on the company's and directors' credit files in the normal way.
What if the business banks with a provider that does not support Open Banking?
Not all banks have implemented Open Banking APIs to the same standard. Where the borrower's bank does not support AIS connectivity, the lender will revert to requesting certified paper or PDF bank statements, which may slow the process and require additional verification steps.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.