A new study has found that SMEs are now using Open Banking solutions a lot more frequently than before the pandemic began. Approximately half of the SMEs that took part in a recent survey claim they’re now using Open Banking services providers, according to research conducted by OBIE and Ipsos MORI.
Since the beginning of the COVID-19 pandemic (around late February to March 2020), around half or 50% of UK-based SMEs reported using some type of Open Banking service. This, according to the Small Business Financial Landscape Study performed by the Open Banking Implementation Entity (OBIE) and Ipsos MORI.
The study reportedly involved 500 SMEs and asked them questions about certain financial decisions they might have taken following the Coronavirus outbreak. The survey aimed to gain a better understanding of how smaller businesses have been maintaining their operations during these unprecedented times.
Half of the companies surveyed revealed that they’re using Open Banking to streamline operations, while nearly three-in-five or 60% began using the services during the past 6 months. Most (90%) of the small businesses responding to the survey said they mainly began using Open Banking due to COVID.
Almost a quarter (24%) of SMEs reported using Cloud-powered accounting solutions. Meanwhile, 41% of companies using online accounting tools said they were able to lower the administrative overhead like having to process a lot of tedious and time-consuming paperwork.
Around 20% or one-in-five of SMEs responding to the survey said they’ve been using cash flow forecasting tools, with just over a quarter or 27% claiming that these solutions have helped them gain a better understanding of their business model.
Constanza Castro Feijoo, Small Business Engagement spokesperson at OBIE, stated that it’s quite encouraging to see the United Kingdom’s SME community realizing that Open Banking can help with ensuring that their business becomes more “resilient, productive and profitable.”
He also mentioned that the research has identified that the barriers or challenges to adoption came mainly from SMEs’ “unfamiliarity” with Open Banking processes and how they can help with streamlining their business operations.
He revealed that some of the small businesses had been concerned about “opening up” their financial or data to third-party service providers. But he claims that the data-sharing method is “consent driven” and that it’s also safe and secure. He also noted that it allows companies to get a clear overview of their financials which “opens more financial products rather than limits them.”