UK small businesses embrace open banking

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open banking


Research by Open Banking Ltd (OBL), the body set up by the CMA in 2016 to deliver open banking, shows that UK businesses are adopting open banking products at a higher rate than individual consumers.    


What is Open Banking? 

Before 2018, if you wanted to share your financial information with any other financial provider than your bank, you needed to fill out a lot of time-consuming paperwork, which slowed the process of accessing vitally-needed finance and funding.   

Open Banking rules mean that the big banks have to allow their customers to share financial detail with authorised providers, giving them read-only access to transaction history and regular payments, which they can then use to personalise products or make suggestions on where savings can be made.  

However, this can only happen if the customer has given permission using their bank’s mobile app or online banking.    


OBL research  

  There is no doubt that open banking is on the rise as both individuals and businesses realise how convenient it is and this is borne out in the analysis that OBL carries out as part of its remit on how open banking is being used and the changes year on year.   

The latest research reveals that open banking-enabled products are being used by over seven million consumers and small businesses. In 2022, there were 68.2 million open banking payments, up from 25.2 million in 2021. Month-on-month growth is running at around 10%.  

SMEs are using open banking products, and the penetration rate is 16%, compared to 11% for “digitally enabled consumers” even though there is a higher number of products available to the latter. The gap is widening and the figures suggest that this is due to more small businesses using cloud accounting software, which uses open banking systems to import transaction data.  

OBL’s analysis shows that SMEs make significant use of data-driven Account Information Services (AIS) which let firms see multiple accounts at the same time, meaning they can gain insight into financial data to make better decisions about cash flow and forecasting. This makes up nearly 80% of business use. Only just over half of non-business consumers use these services as money management tools, helping them access and organise their own personal budgets.   


Payments made via open banking are becoming important for retail customers as well. These types of payments include tax payments, charity donations, and other account top-ups as well as the settlement of credit card bills and the funding of digital wallets.  


Have you thought about exploring open banking in your business?