Two in three (66%) larger UK businesses say they are very familiar with open banking and users report an average annual saving of 150 hours usually spent “on operational tasks such as processing invoices and financial data, recurring payments and processing refunds, new research reveals.”
Payit by NatWest surveyed 150 business leaders “across UK organizations with an annual revenue of £2 million or more.”
The results show how open banking is “helping to tackle payment processing costs, reducing operational time spent on finance tasks, and can help improve customer experience.”
Business leaders using open banking “amongst their payment systems reported spending a monthly average of 44.5 hours on finance tasks compared to just over 57 hours spent by those who don’t use open banking.”
Across the year this accumulates to “more than 150 hours, or over four working weeks.”
It appears that with a reduction in time “spent on tasks come financial rewards.”
Businesses without open banking typically “spend £1,687 more on payment processes annually, and £1,117 more on card processing fees than those with the technology in place: an 8% difference in spend annually.”
Now in its sixth year, open banking’s profile has “grown drastically, with 97% of UK firms reporting some level of awareness of the technology.”
The research shows that businesses “with higher revenue are more familiar with open banking, and familiarity drops in line with revenue.”
By securely sharing data “with third-party apps and services open banking provides access to new payment tools, automated financial management, and real-time updates, that all help reduce operational time spent on tasks such as these.”
Financial experts say that open banking adoption “can have wide-reaching benefits to businesses, with the ability to tap into real-time data to make better-informed decisions, in addition to tools to help manage payment tasks.”
This is evidenced by the research which “showed businesses using open banking among their payment processes reported fewer issues with common finance tasks. Just over a quarter (26%) of those using Open Banking view late payments as a top issue, compared to over two in five (42%) of non-users reporting this.”
Respondents said that having “access to the real-time data provided by open banking would help develop customer experience (39%), improve payment efficiencies and reduce operational costs (37%).”
However, the report unearthed the barriers “preventing businesses from implementing open banking, with almost half (48%) having concerns about cybersecurity risks.”
This is despite Open Banking’s security profile “being based on Finance Grade API specifications, similar to bank level security, and being regulated by the FCA or a National Competent Authority2.”
Mike Elliff, CEO at PayIt by NatWest, said:
“It’s encouraging to see UK businesses embracing open banking and benefitting from the operational and cost efficiencies it can bring. We hope to see this awareness and adoption of new payment solutions grow and would encourage businesses to give it a go. While the concerns around security and fraud are apparent in this research, businesses can be confident that open banking is based on the security inherent in your online or app-based bank account. Wider understanding of this could help tackle barriers to implementation and open opportunities for businesses to lower operational spend and move closer to their objectives. As the financial landscape evolves, companies embracing the technology stand to gain a competitive edge in the ever-changing business environment.”
Based on a typical 37.5 hour working week. Total open banking savings a month add up to 12 hours and 33 minutes a month, “equaling to 150 hours saved throughout a year based on a typical 37.5 hours working week.”
Methodology
Audience: 150 chief financial officers, chief executives, and financial decision-makers across UK organizations “with an annual revenue of £2 million or more.”
Survey period: 8th-13th December 2023.
The survey was unbranded for all respondents.