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What is Bank Statement Analysis?

If you or your business has applied for finance over the last 2 years, chances are you have come across ‘bank statement analysis’. In the article, we will explain why this is needed and answer all concerns around safety and privacy.

Banking analysis is a technology that enables lenders to determine the serviceability of the borrower, put simply, is your business going to be able to afford the monthly repayments? By law, all lenders are required to comply with a code of ethics and ensure that borrowers are able to pay back the loan. Banking analysis is a sophisticated way that allows lenders to comply with these ethics.

How does the technology work?

Without going into detail about the algorithm, the analysis looks at cash flow coming into the trading account and expenses going out. It also analyses your current monthly loan repayments and determines if an additional loan repayment can be satisfied. There are a few key areas they look at like gambling expenses and internal transfers.

Now that we understand how the technology works and what it is used for, let's discuss security & safety. It can be intimidating logging into your bank account through a 3rd party application or website. However, signing into a banking analysis software only allows a view-only use of your transaction history, not the ability to transfer money. Once the transaction data has been captured your sensitive information is destroyed and your login information is never stored. The information that is received by the lender is no different to a PDF bank statement or paper version.

Ultimately, banking analysis is here to speed up the process for your business to access funding as the data can be analysed instantly rather than a paper or PDF version that may take up to a week. We hope with can provide some insight into why a lender or broker may ask you to undertake a bank statement analysis and remove some hesitancy about security and safety. Any questions please reach out.

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