Half of the SMEs surveyed now use open banking providers, according to the research from Ipsos MORI and the OBIE.
Since the start of the pandemic half of SMEs (50 per cent) are now using services offered by open banking providers, according to a joint research venture from Ipos MORI and the Open Banking Implementation Entity (OBIE) found that,
The Small Business Financial Landscape study asked 500 SMEs about the financial decisions they have taken since March 2020 to support their businesses through the pandemic.
Of those surveyed, half now use open banking providers, with almost three-in-five starting to use the services in the past six months, with the vast majority (90 per cent) citing Covid-19 as the main reason.
Nearly a quarter (24 per cent) of SMEs used cloud accounting platforms, with 41 per cent of those using the digital accounting tools saying that it had reduced the administrative burden associated with paperwork.
Similarly, 21 per cent of small businesses surveyed have started using cash flow forecasting tools, with just over a quarter (27 per cent) saying it helped them understand their business better.
Constanza Castro Feijoo, Small Business Engagement spokesperson for the OBIE, said: “It is encouraging to see the UK’s small business community recognising that open banking can help to become more resilient, productive and profitable.”
“From cloud accounting and sophisticated cashflow management platforms to reducing fees, businesses can improve their financial management and, therefore, their ability to cope with the change when cashflow becomes tight.”
As well as wider adoption of open banking-powered products, SMEs have also been switching their current accounts at a higher rate than normal, with 17 per cent changing their current account during the pandemic, nearly double the normal 10 per cent of SMEs.
When asked about what the biggest challenges they face as a business, the most commonly cited concern was cashflow being difficult to manage (19 per cent), which was closely followed by the ability to manage finances due to monthly changes in income (17 per cent).
Castro Feijoo added: “The research identified that the main barriers to adoption stemmed from SMEs’ unfamiliarity with open banking and how it could help their business.”
“Some SMEs said they were wary of ‘opening up’ their data to third parties. However, open banking is consent driven, it’s safe secure and sharing your data just gives a fuller financial picture that opens more financial products rather than limits them.”
It’s not just SMEs who have been adopting open banking, in the past year open banking usage has doubled among the wider population, with now over two million people in the UK using the innovation.