Losing Billions: Why Open Banking Was the Missing Piece in the BBLS Puzzle

Mounting evidence suggests that losses from the Bounce Back Loan Scheme (BBLS) could have been drastically reduced if Open Banking tools had been used from the outset to verify applicant information. According to government estimates, fraud and error account for about 6.8 percent of BBLS loans—funds that might have been better protected by real-time data sharing and automated checks.

Government sources confirm that additional suspected fraud identified by lenders is now under review, with a view to recovering any fraudulently obtained funds. Experts note that this process could have been far less burdensome had lenders taken advantage of Open Banking services to confirm income streams, transaction histories, and overall business stability prior to issuing loans. Crucially, Open Banking’s ability to capture real-time financial data would have provided more accurate assessments, enabled proof of eligibility, and better distinguished businesses genuinely harmed by Covid from those trying to game the system—effectively curtailing fraudulent activity.

Evidence of the fraud’s extent underscores the severity of the problem. The BBLS disbursed nearly £47 billion across more than 1.5 million loans; applying the government’s 6.8 percent fraud estimate suggests roughly £3.2 billion in potentially fraudulent or erroneous claims. The National Audit Office has warned that final losses—including both fraud and default—could be even higher if the loans remain unrepaid or are misused.

A Department for Business and Trade spokesperson noted that the newly flagged cases do not necessarily increase total payouts but are the result of lenders reclassifying earlier disbursements after more extensive fraud detection. Even so, the reclassification highlights a missed opportunity for tighter oversight at the application stage—precisely where Open Banking’s real-time insights would have supported more reliable eligibility checks. By embracing Open Banking, the government could have minimized taxpayer exposure and ensured that critical funding reached the businesses that truly needed it.