Last year alone, fraudulent rental applications surged by 140%. With fake payslips and doctored bank statements now disturbingly convincing, even seasoned agents struggle to spot them.
This means you risk placing fraudsters in your landlord’s properties, who will be difficult to evict even if they don't pay rent.
But fraudsters aren't the only problem you face. Traditional tenant referencing can be slow and exhausting.
Chasing payslips and bank statements can drag on for days and sometimes weeks, delaying move-in dates and increasing void periods.
Open Banking goes some way to resolving both of these issues in one go. With instant, read-only access to verified financial data, sourced directly from the tenant’s bank, it accelerates the tenant referencing process and reduces fraud risk.
In this guide, we’ll explore how Open Banking works, why it’s safe, and how it’s helping letting agents streamline tenant vetting.
What letting agents need to knowBefore diving into the specifics, here are the key takeaways:
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Open Banking allows tenants to securely share financial data directly from their bank accounts with referencing providers. With one-off, read-only access to verified financial information, providers gain instant insight into the tenant’s financial position. This speeds up referencing checks, meaning that they can often be completed on the same day.
Note: Tenants can only use Open Banking if they have an online or mobile banking setup.
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”.
These third parties must undergo rigorous due diligence and obtain regulatory approval from the Financial Conduct Authority (FCA) or its European equivalent. Only then can they access banking data such as transactions, credit cards, and loans.
Tenant referencing often hinges on financial checks to make sure applicants can and will pay rent throughout their tenancy. Agents usually do this manually or use a third-party provider.
The traditional process involves chasing down payslips, bank statements, employer letters, and credit reports. It’s a slow, admin-heavy process for both tenants and letting agents.
And it’s not always a foolproof process. It’s possible for applicants to falsify bank statements or have “referees” provide false information on their behalf.
Open Banking makes financial referencing a lot quicker and safer than the traditional process. Open Banking offers:
Providers like Goodlord already use Open Banking to streamline income verification for tenants and guarantors (Goodlord's integration with Open Banking was first to market in the industry).
When a tenant begins the referencing process, they’re asked to give explicit consent for their financial data to be shared. Once granted, the referencing provider then sends a request to the tenant’s bank, asking only for the relevant financial data to assess affordability and reliability.
The bank responds using application programming interfaces (APIs) that allow two platforms to “talk” to each other and exchange only the pre-approved information.
With read-only access to details like income patterns and regular rent payments, referencing providers gain a fast, fraud-proof view of the tenant’s financial behaviour, without the paperwork.
Free resource: An open banking guide for renters
When a tenant consents to share account details, the referencing platform receives transaction data typically covering the past 90 days. This allows letting agents and the Goodlord Referencing team to gain access to key financial insights instantly.
With Open Banking, the Goodlord Referencing team can see a prospective tenant’s recurring income (generally, this is data taken from the last three months). This information lets the team confirm that the tenant can consistently meet the rent and indicates employment stability.
Instead of relying on static paperwork, agents now base their decisions on live financial behaviour, which is automatically analysed and summarised in a referencing report. This report distils key signals into clear outcomes: Pass, Conditional Pass, or Fail.
It’s important to note that this access is never automatic. Tenants must actively opt-in. If a tenant changes their mind about Open Banking, they are allowed to withdraw their permission at any time, as permission only allows an API connection for that specific transaction. If Goodlord were to request a tenant to connect to Open Banking a second time, permission has to be given again.
Open Banking isn’t just a safer way to verify tenants; it’s a practical upgrade for letting agents to run your agency.
The digitised process ensures your agency stays aligned with data protection regulations. Sensitive financial data is accessed securely, with tenant consent, and never stored or shuffled around manually.
Automated data retrieval means fewer human errors and less back-office admin. You get accurate, verified financial insights without having to chase documents or second-guess their authenticity.
Instead of relying on potentially falsified payslips or bank statements, you get a well-rounded financial snapshot pulled directly from the tenant’s bank. It’s tamper-proof, real-time, read-only, and transparent.
With instant access to verified data, tenant referencing is quicker. Tenants can sign contracts and transfer deposits faster, cutting down void periods and keeping landlords satisfied.
The Goodlord referencing team will only have one-time access to an applicant’s bank account data and will only receive the necessary, minimal information to make an informed decision.
Open Banking has been designed with security at its core. Every process includes built-in safeguards to keep the consumer safe, such as:
Users are further protected by the Data Protection and Digital Information Bill and the Financial Ombudsman, who can step in if something goes wrong.
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.
Importantly, applicants should never be asked to share their login details or passwords for their online or mobile bank accounts. If an applicant believes a company is misusing data or there is an attempt at fraud, they can contact the Financial Ombudsman.
While no system is entirely immune to fraud, Open Banking is one of the safest options available when it comes to financial data sharing.
Industry figures show that fraud rates for Open Banking transactions sit at just 0.021%, compared to 0.037% for other payment types. And when it comes to unauthorised fraud, Open Banking performs even better, just 0.008%, versus an industry average of 0.032%.
But here’s the key point for letting agents: Tenants aren’t using Open Banking for payments, they’re using it for referencing.
That means no money is being moved, and no payment credentials are exposed. It’s read-only access to verified financial data, with the tenant’s full consent. That alone makes it significantly safer.
Compare that to the fact that over 50% of tenancy fraud involves fake payslips and doctored bank statements; Open Banking offers a far more secure alternative. Pulling financial data directly from the source makes it significantly harder for fraudsters to manipulate or misrepresent their credentials.
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.
Open Banking’s already made tenant referencing quicker and far less prone to fraud. But that’s just the beginning. We’re entering an era where agents can check affordability, track rental payments, and even flag arrears early, all through one secure, easy-to-use platform.
And it doesn’t stop there. Some providers are now introducing tenant passports—digital profiles that hold verified financial data under one umbrella and move seamlessly between tenancies. It’s a smarter, more portable way to rent, and it could soon make rent payments themselves easier to manage and automate.
Open Banking has transformed the way financial data can be shared, offering a fast, secure view of an applicant’s income and spending. With this being said, it isn’t flawless. Since it’s opt-in, adoption can be patchy. According to the Goodlord State of the Lettings Industry report, around 30% of tenants still decline to use it due to privacy concerns, meaning it can’t always be the only source of truth.
HMRC and payroll integrations help fill those gaps. Like Open Banking, HMRC access is opt-in, but when tenants consent, it provides official tax records that validate income history and employment. This offers a valuable complement to banking data.
Payroll integrations go further. These integrations are often not subject to the same opt-in barriers and so deliver real-time employment and salary details straight from payroll providers. This makes verification both accurate and consistent.
The real strength comes from combining all three: Open Banking for affordability, HMRC for historical records, and payroll for current income. Together, they create a balanced, reliable, and tenant-friendly verification process.
At Goodlord, we help you do more than just verify tenants’ income and affordability. Our tenant referencing product is seamless and end-to-end.
Goodlord uses Open Banking through Tink, a leading provider trusted by over 6,000 banks and fintechs across Europe for secure data aggregation and payments. Tink is built on Financial Grade API (FAPI) specifications, ensuring bank-level security and compliance with UK Open Banking standards.
Open Banking is just the start. Our full tenant referencing service checks across four key criteria: identity, credit, residential history, and income and affordability.
For PRO and Priority references, we even integrate with HMRC and payroll providers to verify income directly.
Once you send the link to your applicant, we gather and verify documents, chase referees, and manage the entire journey from start to finish.
Our UK-based in-house tenant referencing team handles your references. They’re dedicated to providing you and your tenants with a seamless journey, backed by the best technologies.
They're also on hand to answer any questions and will proactively step in to ensure that even the most complex references are managed with ease.
No, agents don’t need a licence themselves. However, they must work with authorised providers regulated by the Financial Conduct Authority (FCA) or listed in the Open Banking Directory.
The Goodlord Referencing team can view read-only financial insights, such as income patterns, rent payment history, and regular outgoings, to assess affordability and reliability. They cannot initiate payments or access login credentials.
Yes. Open Banking uses bank-grade security and is governed by strict data protection laws. Tenants must give explicit consent, and agents only receive the minimum data needed for referencing.
Access is typically one-time and time-limited. Once the tenant referencing process is complete, agents cannot continue viewing or storing the data.
Not entirely. It’s a powerful tool for verifying income and affordability, but full tenant referencing still includes identity, credit history, and residential background checks.
This article is intended as a guide only and does not constitute legal advice. For more information, visit gov.uk.