At The Lettings Hub we connect to over 40 UK banks via Open Banking with seven out of every ten applicants consenting to share their data. Since launching Open Banking two years ago, zero fraudulent cases have been reported with tenants utilising the technology. Let us explain how it all works…
What is Open Banking?
Open Banking takes away the pain of providing financial information to various parties. With a simple permission via your bank’s mobile or online banking, authorised providers can gain read-only access to all sorts of data – such as spending transactions and regular payments – with no need to fill out complicated forms. Data is kept completely secure, making it a convenient and secure way for tenants to share their bank account details without having to go through the hassle of scanning documents or trekking into an office. Open Banking offers an improved customer journey for tenants and eliminates the waiting game for letting agents.
Why Open Banking Means Faster References
Open Banking has revolutionised the way we validate tenants’ data, offering a much faster solution compared to the past. When using Open Banking our Essential++ reference and++ Property PassportTM solutions deliver final recommendations in three working hours. This also eliminates the need for customers to supply multiple bank statements, making this hassle-free for agents and tenants.
How Data is used to Verify Income and Rent Securely
Open Banking financial data will only be used to verify tenant income and affordability of the rent. It will confirm ongoing rental payments (if applicable) to ensure timely payment of the most recent tenancy. Income and/or rent transaction details found within the last 12 months will then be provided to the letting agency in the report, making sure that this information is automatically accessed just once. Open Banking ensures that information used to assess potential tenants is correct and up-to-date. It also gives landlords peace of mind, knowing their agent is making a credible decision on who to grant the tenancy to.
Fraud-Proof Affordability Assessment
Lettings agencies around the country have identified an uptick in fraudulent or doctored bank statements being presented. It is probably not surprising that tenants may attempt to paint themselves in a stronger financial position, considering the cost-of-living crisis we are presently facing. To avoid potential tenancy agreements being breached and accept only those applications which are honest and accurate, advanced tools such as Open Banking should be employed to detect any suspicious activity quickly and effortlessly.
Promoting the Benefits to Tenants
70% of our tenants have now agreed to Open Banking, for those who are unsure we have some useful myth-busters to give you the true story on what Open Banking does and doesn’t do…
“Open Banking provides full access to my bank account.”
The data provided to us is transferred securely through an encrypted connection from the applicant’s bank to the BOX platform. We are only privy to information specifically approved by them during our application process, and we have no access to login details or banking passwords. Likewise, no payments nor any alterations can be made on their behalf.
“Open Banking provides companies with potential access to my financial data, which could be used to monitor my transactions.“
Once we obtain consent from the applicant, their data is collected only for the purpose of verifying their income and rent payments as well as assessing if they qualify for the tenancy. They can provide usage of Open Banking which allows for a “snapshot” to be taken by their bank and sent over to us. Immediately after this happens, an encrypted connection is made and then shut down so no further information can be exchanged.
“I am exposed to more potential fraud and the possibility of my bank account being hacked when I use Open Banking.“
Bank statements can be easily intercepted by malicious third parties when uploaded or emailed, however with Open Banking our platform has a direct link to the applicant’s bank, meaning data is transferred securely. We receive a similar amount of information as what is usually shown on bank statements, although transactions are categorised into income and rent/mortgage payments. This offers much greater privacy for applicants as it means we rarely have to view other transactions that would be exposed on bank statements – in around 99% of cases.
The Director of Residential Lettings at Cheffins noted that Open Banking had a significant benefit for their agency, read below how using Open Banking revolutionised their referencing.
“When I first started using Open Banking through The Lettings Hub, it was clear that we weren’t going to have to ask as many questions to our tenants anymore. It shows us exactly what we need, all the relevant types of transactions such as outgoing rent payments and income for the last 12 months. We don’t have to trawl through information looking for those transactions ourselves, so it’s a huge time saver.
Fake bank statements are unfortunately becoming increasingly common in the lettings industry, and Open Banking has eliminated the need for us to be suspicious or spend any time trying to validate the statements we’ve been given.
I now also have really great conversations with Landlords, who are feeling more confident that we’re getting accurate information about tenant affordability now that we’re using Open Banking. It’s been a brilliant way to boost our working relationships with landlords and increase trust!
Our tenants are happy with it too, as they understand that it’s only one-time access, and that we won’t see anything that’s not necessary for the letting’s procedures. The permission is in their hands, and with a few clicks they can connect with their bank instead of having to print their statements themselves, spend time scanning or having to bring them into the office.
The system is really secure, straight from the bank to The Lettings Hub’s platform. Convenient, and easy to use, we’ve found it to be a seamless introduction to our process and we’re so glad we made the switch!”
Sarah Bush, Director of Residential Lettings – Cheffins
Using Open Banking is far more beneficial than a paper statement approach; it’s user friendly, precise, and secure. There’s no need to look back once you’ve experienced the advantages of this technology.