OBIE Says Open Banking is Delivering Benefits to Small Businesses

Last week, the OBIE (Open Banking Implementation Entity) published an Impact Report that indicates open banking is delivering significant benefits to small business.

The OBIE report pointed to cloud accounting services stating that 75% of users started using the service no more than three years ago, with 36% having adopted it within the past year.

“Open banking started to be incorporated into cloud accounting from April 2019, as one of the earliest propositions. 11% of respondents claim they would stop using their cloud accounting package and 50% would look for an alternative if they lost the ability to incorporate real-time transactions. Open banking is clearly a valued feature among adopters.”

Some findings of the report include:

  • a majority (77%) of respondents report that they now have more immediate and accurate insights into their financial position at any given time as a result of using these services.
  • 44% of all small businesses reported that their use of the accounting software means that they longer need external accountancy support.
  • Business penetration (11%) is slightly higher than consumer use (10%), but the gap between the two has closed since 2021.
  • In the six months to March 2022, there were 21.1m open banking payments, compared to 6.1m in the same period the prior year. Month-on-month growth is running at around 10%

The report also states that as of March 2022, there were 128 fully regulated firms with live-to-market open banking-enabled products and services – a number that has “plateaued.”

The three most common outcomes of open banking continue to be:

  • Improved financial decision-making (31%)
  • Expanded payments choice (24%)
  • better borrowing (18%)

These three areas represent 94 of the 128 firms.

Interestingly, services like “switching” and improved savings and investments have limited or no availability (in regards to switching). Switching was initially anticipated to be a hot market segment for open banking service providers.

OBIE reported there were 327 million faster payments and 1.7 billion card transactions indicating that today open banking payments represent only 0.2% of UK retail payments – so plenty of room for growth.

OBIE said they “expect to see innovative new and unanticipated products and services using open banking.”

Maria Palmieri, Director, Public Policy at Yapily – an open banking firm,  commented on the report:

“We welcome the latest impact report from the OBIE, indicating that we are witnessing open banking’s most significant growth period to date. Account-to-account payments are up more than 300% in the six months to March 2022, and the number of digitally-enabled consumers using open banking is up nearly 200% from last year. This massive growth is just the first step of the evolution of the sector, but more needs to be done to continue this upward trend. Open finance has the potential to unlock more innovative use cases, giving millions of people access to more tailored and secure financial products and services. We urge regulators to embrace open finance and put forward a suggested framework as quickly as possible in order to reap the benefits for both consumers and businesses.”

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