Businesses around the world have been preparing for, and reacting to, the impending recession since mid-2022. Budgets have been cut, layoff plans have been executed, and near-term adjustments have been made to strategies, pricing, and product roadmaps.
All of this is being done with one “simple” goal in mind: don’t run out of money.
It shouldn’t be a surprise, then, that Chief Financial Officers (CFOs) are taking on a more active role in…well…just about everything. This includes buying decisions that they may have just passively participated in before.
As the title suggests, in this article, we’re going to focus on one buying decision in particular - investing in open banking - and how to get your CFO on board. But, before we cover why they should embrace open banking, let’s first answer an important question…
…Is now really the time to consider buying an open banking solution?
It sure is. Open banking can help businesses save money, improve user experience, and expand to new markets. We talk about these three points in more detail in this blog.
Now that we’ve gotten that out of the way…
What do CFOs care about?
CFOs wear many hats. Working closely with the CEO and other senior leaders, they are responsible for tracking cash flow, setting budgets, analysing their company’s financial strengths and weaknesses, and proposing strategic directions. They also play a role in ensuring compliance and managing regulatory changes. In smaller companies, particularly FinTechs, CFOs tend to weigh in on technology and innovation, too.
That means they care a lot about operational efficiency, driving revenue in the short, medium, and long-term, and mitigating risks. Open banking supports all three.
Why should CFOs embrace open banking?
Open banking drives operational efficiency
Open banking drastically reduces reliance on manual processes and can automate identity and income verification, reconciliation, and payroll (to name a few). This saves companies valuable time and money and reduces the risk of fraud and late payment.
Know Your Customer (KYC) checks
Every day, companies run thousands of KYC checks… and it can take days, even weeks, to complete a single one. But with open banking (and products like Yapily Validate) compliance teams can verify and onboard new customers in minutes by accessing their bank account information, balances, transactions, and account details in one sweep.
Learn more about how open banking simplifies KYC checks here.
Reconciliation can be a tedious process for companies, especially those handling large volumes of customer payments. And the process is even more time-consuming when customers enter incorrect payment references and amounts.
Open banking streamlines the process by pre-populating the correct payment reference and amount, leaving no room for error.
And, with Instant Payments, funds settle instantly. This enables businesses to access funds for better liquidity control, and with better visibility and control of their real-time cash position, they can make more strategic decisions around their working capital and ensure predictability and reliability between customers and suppliers. This will foster trust and, over time, build stronger business relationships.
While individual payments can be relatively painless for companies, batch payments… not so much. Open banking helps companies orchestrate bulk payouts (like processing payroll) as an embedded process within their own platform.
Products like Yapily Bulk Payments empowers companies to make multiple payments from a single bank account to a list of recipients in one transaction, from a phone or a computer. Our API is invisible to the end user, giving you complete control of your payment experience. No more file uploads or convoluted processes = time saved.
But just how much time? Comma’s finance team reduced time spent processing bulk payments by 77% after partnering with Yapily.
Want to explore more open banking use cases? Click here.
Open banking drives revenue
In times of economic turmoil, businesses tend to play it safe. The expression “No one ever got fired for buying IBM” comes to mind…
But there are benefits to being a first mover or early adopter. In fact, research shows that companies that invested in transformative, innovative technologies grew revenue five times faster over the pandemic.
So, how can open banking innovation help you increase your revenue? To start, it can help you break into new markets. Yapily’s API, for example, gives customers access to over 2,000 banks and other financial institutions across 19 regions, and has the strongest coverage across retail, business, and corporate accounts.
Open banking helps with customer retention and loyalty, too. Here are just a few examples of how…
For lenders… access to data is automated and customers only have to re-consent every 180 days. Parameters can be set up to trigger alerts that can lead to proactive discussions, so customers won’t fall behind on their payments.
For digital banking… customers can combine their bank accounts and centralise their financial data in one place. Rather than flicking between multiple accounts, they can easily check their spending, balances, savings (and more) from one dashboard.
For payment services… the checkout experience is seamless since customers don’t have to enter their card details. What’s more, access to data can be used to personalise reward schemes and foster customer loyalty.
Open banking helps reduce the risk of data breaches and fraud
Open banking began as a response to evolving security threats and products and services powered by open banking are designed to keep data safe. This is more important now than ever, given the average cost of a data breach has soared to nearly £4 million.
The old way of doing things - screenscraping - allowed service providers to access online banking interfaces to pull data. Hello fraud risk 👋🏼
But with open banking, financial data flows through secure pipes called application programming interfaces (APIs), and Third-Party Providers - who must be licensed by the Financial Conduct Authority (FCA) - need consent before accessing it.
Likewise, payment rails are built on top of secure banking infrastructure and use the same encryption and security protocols as online banking. They’re also regulated by government bodies who ensure that third parties are following strict guidelines for protecting customer data.
Learn more about security in open banking here.
Want to learn more about open banking, how to evaluate a solution, or how to get buy-in? Check out the articles below, and follow us on LinkedIn to be the first to hear about new content.
- What’s open banking and how does it work?
- How to get buy-in for open banking
- Open banking buyer’s guide
And, if you and your CFO are ready to take the next step, book a call with our sales team now, or explore our API documentation.