SMEs faster to adopt open banking than consumers
Despite more open banking products being available to consumers, adoption by businesses is higher, according to a new report.
The latest Open Banking Impact Report from Open Banking Limited (OBL), the body tasked with rolling out the data-sharing initiative, revealed that businesses have a 16 per cent penetration rate versus 11 per cent by consumers.
There are around 750,000 small- and medium-sized enterprises (SMEs) using open banking products.
The research showed that the gap between the two is widening as more small businesses adopt cloud accounting software, that uses open banking to import transaction data.
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The report also identified a clear difference in consumer and SME use of open banking, with small business use dominated by data-driven account information services (AIS).
AIS enables firms to see multiple accounts in one place, providing real-time insights for cash flow and forecasting, and accounts for 79 per cent of business use. This falls to 52 per cent among consumers, who may use these services for money management tools, to help them budget.
However, consumers are using more payment initiation services, which allow them to move money, to top up wallets, or to pay tax or credit card bills, for example.
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The report stated that there were 68.2 million open banking payments in 2022, up from 25.2 million in 2021.
The fully regulated market remains dominated by propositions addressing improved financial decision-making (49), expanded payments choice (45) and better borrowing (27).
However, the OBL noted the emergence of propositions including identity services, charity roundups, private banking and support with tax calculations.
Most providers are targeting both consumers and small businesses (48 per cent), whereas 30 per cent focus exclusively on consumers, and 22 per cent focus on small businesses only.
“It is encouraging to see a continued and steady increase in the adoption of open banking products and services, particularly by the UK’s small firms which are seeing tangible benefits from real-time business insights offered by open banking data”, said OBL chair and trustee Marion King.
“It is also exciting to see the expansion of services in key areas such as borrowing and financial decision-making, empowering people to make better informed choices about managing their money, which is crucial as we face an increased cost of living.”
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