Your Guide to Open Banking for letting agents

11 April 2024

Open banking is becoming more well-known. But how does it apply to the lettings sector? And is it safe?

Anything that involves bank accounts can be off-putting for prospective tenants. Money can be a difficult topic - especially when it’s not clear how secure the technology is. But Open Banking can help with the referencing process.

Open banking, for example, is becoming more well-known. It has dramatically improved the speed of referencing tenants and is becoming an important tool for the private rental sector. 

Through open banking, letting agents will collect only the necessary information about a tenant’s financial status without the paperwork. However, it is understandable why prospective tenants could be uneasy about using this process.

Here is a guide to explain what open banking is, and what it means for tenants, letting agents, and landlords.

What is open banking?

Open banking is a secure way for tenants to share financial information directly from their bank accounts.

For open banking to work, consent must first be given to share information. A request will then be made to their bank only to share the relevant information necessary for the referencing process. The bank will share your information securely through application programming interfaces (APIs), which allows two platforms to “talk” to each other and pass over information that was agreed to be shared.  

Initiated by the Competition and Markets Authority (CMA) in 2017, open banking allows consumers “to share their bank and credit card transaction data securely with trusted third parties who are then able to provide them with applications and services which save time and money”. 

A tenant can only go through open banking if they have an online bank account or mobile banking set up.

Why is open banking used for referencing?

Agents usually undertake financial checks as part of the referencing process to ensure they can and will pay the rent during their tenancy. This can be through their systems (e.g. payslips), or using a third-party ‘renttech’ provider.

The traditional process for a tenant to prove their income is lengthy and time-consuming. A lot of documents tend to be involved, from payslips to prove a tenant's employment, to bank statements and credit checks that confirm a tenant's financial situation. 

Open banking makes financial referencing a lot quicker than the traditional process and can be verified within a single day or even hours. 

Help your tenants breeze through referencing with a free checklist that outlines the whole process

How does open banking work?

Open banking provides a snapshot of a prospective tenant's financial behaviour with “read-only access to things like [their] spending transactions and regular payments”.

By consenting to open banking, tenant banks share information securely through APIs. 

Through Open banking, letting agents can see:

  • Account details such as the account holder’s name and their balance
  • The amount of money coming into an account each month including income, pension or savings
  • The amount of money coming out of the account each month, including direct debits and standing orders
  • Whether the applicant has historically paid their rent on time (if applicable)

This means that prospective tenants won’t need to provide the mass of paperwork to ensure they can pay their rent. 

However, this will never be done without the tenant's permission and they must opt-in to use this service. If a tenant changes their mind on open banking, they are allowed to withdraw their permission at any time. 

Free resource: An open banking guide for renters

How safe is open banking?

Letting agents will only have one-time access to an applicant’s bank account and will only receive the necessary, minimal information to make an informed decision. 

All open banking processes have embedded features to keep the consumer safe, such as:

  • Bank-level security with Financial Grade API specifications
  • Regulations by the Financial Conduct Authority (FCA)
  • Putting the account owner in charge, choosing when to give access to their data

Users are further protected by the Data Protection and Digital Information Bill and the Financial Ombudsman.

Banks can further protect applicants when sharing their data, but only if they use authorised providers. You can check whether a company is authorised on the FCA Register and/or the Open Banking Directory.

Applicants should never be asked to share their login details or password of their online or mobile bank accounts. If an applicant believes a company is misusing data or there is an attempt of fraud, they can contact the Financial Ombudsman

Does open banking cause fraud?

Agents are understandably worried about fraud in their lettings business. With the opportunity for fraud such as fake pay slips on the rise, it is important not to place letting agents, landlords and tenants in a vulnerable position for referencing.

However, open banking is very safe. Open banking “has not-to-date introduced new fraud risks”.

Does open banking affect credit scores?

No, when letting agents conduct a financial check on a prospective tenant, open banking will not affect their credit score.

A credit score is “made up of factors, like how much credit you use and how reliable you are at paying it off”. As Open Banking only takes a screenshot of a bank account, it won’t affect a user's credit score to use the process.

This article is intended as a guide only and does not constitute legal advice. For more information, visit

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