Traditional underwriting was a tedious, time-consuming process that often took days or even weeks. Lenders would often vet documents, conduct background checks and perform due diligence to assess the borrower’s ability for repayment before sanctioning a loan. The sheer manual nature of the process would cause delays in loan approvals and, thus, a lag in funding acquisition for the borrowers, usually small businesses. Today, technology is changing the finance sector, and underwriting is no different. Automated underwriting via Open Banking’s data sources has paved the way for real-time underwriting, a quick, compliant, and accurate method for affordability checks. Previously, leveraging Open Banking was seen more as a compliance burden, but today, it’s powering a transformation across finance and underwriting. 

The Changing Landscape: Open Banking Matures in the UK

The UK open banking market, measured by revenue, is projected to grow from approximately US $3.5 billion in 2024 to US $14.53 billion by 2030, reflecting a compound annual growth rate (CAGR) of 26.9% from 2025 to 2030  

What started as regulated data sharing under PSD2 has evolved into an ecosystem with real-time data access, richer transaction streams, and consented sharing. As open banking’s reach grows and API standards mature, the compliance burden for banks and lenders is transforming into a data opportunity, especially in credit underwriting. 

Why Real-Time Underwriting Matters

Traditional underwriting in consumer and business lending has often relied on outdated credit bureau data or manually submitted financial statements or documents. This traditional model has significant drawbacks: 

• Lagged information: Financial statements or credit reports may be weeks or months old, thus offering limited visibility.
• Opaque cash flows: Restricted visibility into income seasonality, hidden liabilities, or unexpected expenses makes it difficult to understand or assess actual cash flows.
• Credit exclusions: Several potential borrowers, especially new SMEs, lack rich credit histories, which often results in funding rejections. 

Open banking changes the paradigm by giving lenders consent-based, live access to bank account data. This allows for real-time transaction analysis, which provides: 

• Up-to-date cash flow visibility 
• Behavioural insights (spending patterns, frequency of deposits, etc.) 
• Better risk estimation, such as identifying early signs of financial stress 

In 2025, many UK-based lenders still struggle with limited visibility into negative payment history, and open banking helps bridge that gap.  

From Compliance Cost to Risk-Management Asset

For many banks and lenders, open banking started as a compliance necessity. A response to government-backed regulation rather than a strategic move. But now, risk and compliance teams are joining forces to repurpose what was once seen as a cost centre. 

• Identity & Fraud: Transaction data helps validate applicants in real time, reducing reliance on manual KYC checks.  
• Affordability assessments: Rather than relying on self-reported income or tax returns, banks can model affordability from granular spending and income flows.  
• RegTech automation: Real-time open banking data is powering regtech tools for AML, audit, and identity verification.  

Reg-Tech Use Cases

The following reg-tech use-cases will help elaborate on the power of Open Banking data: 

• Compliance Support – Centralises data access and reporting to meet multi-region regulatory requirements. 
• Customer Verification – Confirms a user’s legal identity, income, and available funds using live banking data. 
• AML Monitoring – Flags suspicious or high-risk transactions in real time using continuous transaction feeds. 
• Risk Profiling – Categorises spending and income patterns to assess financial stability and creditworthiness. 
• Ownership Verification – Instantly matches bank account ownership with submitted identity documents. 

In short, the same data that regulators mandate banks to expose data (via APIs) is now the same data that lenders are using to assess risk more precisely, thus transforming a regulatory burden into a risk-management asset. 

Technology Enablers: How Banks Make It Work

To convert open banking into real-time underwriting power, banks need more than API connectivity. They must build strong data infrastructure, analytics capabilities, and governance: 

• Modern data architecture: As highlighted in banking-technology trend reports for 2025, many UK banks are migrating away from legacy systems and more towards cloud-native, API-first solutions. For example, Pulse offers a modular API-first architecture that allows streaming analytics where transaction data flows in real time, rather than being batched. 
• AI and machine learning: Generative AI and ML are central to processing and interpreting open banking data. They help detect spending patterns, predict cash shortfalls, or identify anomalies.  
• Robust data governance: Increasingly, data architecture decisions are framed in terms of data ownership, stewardship, and its provenance. Grant Thornton highlights that banks must establish trusted data governance as data becomes more decentralised across open banking ecosystems. 
• Partnering with SaaS Companies: Partnering with leading SaaS companies like Pulse can be a game-changer. Pulse has created an API-first data architecture and specialised solutions designed to draw data from various sources, including Open Banking and Open Accounting. 

Thus, banks and lenders can access and leverage Open Banking data and various other data streams without having to build the entire infrastructure from scratch. 

Pulse also offers a suite of solutions under its ULI (Unified Lending Interface), designed to automate, digitise, and streamline the entire lending cycle. For example, Pulse’s Loan Origination System automates the loan application process, reducing it to under 3 minutes. Pulse’s Einstein aiDeal is an AI-powered automated underwriting engine that can process thousands of deals simultaneously and auto-decision 95% of deals in under 45 seconds. It draws upon Open Banking, Open Accounting, and various alternative data sources to provide near-instant loan decisions. To learn more about Pulse and its solutions, contact us today. 

Strategic Implications: From Risk to Business Growth

When done right, real-time data (via Open Banking and alternative sources) can deliver tangible business value for banks and lenders: 

• Faster credit decisions: Real-time underwriting cuts application-to-decision times dramatically, improving conversion and customer satisfaction. (Example: Pule LOS and Einstein aiDeal) 
• More inclusive lending: By analysing cash flow and affordability, banks can serve customers who may not have strong credit histories and expand reach to underserved segments. 
• Reduced losses & better pricing: Near-instant loan decisions and real-time underwriting help reduce cost, reduce manual intervention, and boost both scale and volumes.  It also helps reduce default rates and mitigate lender risk. 

Conclusion: Seizing the Opportunity

In 2025, open banking is no longer merely a compliance obligation for banks. It has transformed into a strategic asset. By leveraging real-time underwriting powered by consented transaction data, banks can transform regulatory mandates into core competitive advantages: better risk insights, faster decisions, and more inclusive lending. 

The path demands investment: in data infrastructure, AI, governance, and compliance. Alternatively, banks and lenders can simply integrate functionality from SaaS companies like Pulse. As a bank or lender, whether you choose to build your own infrastructure or partner with leading SaaS companies like Pulse, the payoff is real. Turning what was once a regulatory burden into a unique strength.