Open banking is empowering SMEs to grow faster and smarter

Simultaneously streamlining operations, cutting costs and bolstering your offering is something that would appeal to all SMEs. With open banking, all are covered in the same API integration

To state the obvious, SMEs looking to grow will ultimately need to make more sales. What’s less obvious is how they go about doing that.

Improvements to their product or service is one way, but streamlining their operations will also enable them to put more time and resources into the growth areas of their business, as reducing running costs.

With many different ways to grow, it can be challenging for SMEs to know where to start, especially given that these businesses are often low on resources. But more and more businesses are finding that open banking is enabling them to hit several of these methods at the same time, all via a simple API integration.

Bigger and better: how open banking bolsters a business’s offering

Research suggests that customers increasingly want to pay in a variety of ways, with as many as 69% of UK consumers abandoning their checkout experience if their preferred payment method isn’t available.

As of 2023, mobile e-commerce payments make up 60% of all ecommerce sales around the world. Enabling these customers to sidestep having to fetch their card details to complete a transaction, instead simply authorising a bank transfer via their online banking app - without ever having to leave the business’s site - is unquestionably a superior experience. For SMEs, getting more of these incomplete purchases over the line represents a huge boost to their growth.

Looking further forward, commercial Variable Recurring Payments (cVRPs) have the ability to transform commercial subscription models with a payment method that is both safer than Direct Debit and more flexible. While not yet currently available, its impending introduction will empower SMEs to introduce a reliable recurring payment stream that works for them and their customers.

Eased cash flow through faster settlement speeds

40% of UK SMEs don’t make the five year mark, and the predominant issue these businesses face is cash flow. SMEs need to make payments such as staff costs, supplier payments and rent at given times in the month, yet slow settlement speeds and late invoices can leave them in precarious positions.

Using open banking, SMEs can encourage quicker payment times with a payment method embedded into their service, while also benefiting from access to real-time payment rails. Instead of waiting three to five days for funds to hit their account, it appears instantly thanks to open banking using Faster Payments in the UK and SEPA Instant across Europe.

For businesses such as tradespeople, where purchases are often required in order to work on their next job, this quick payment is a huge boost for their business growth. Cash flow is transformed from being a consistent source of stress to an on-the-spot matter.

Lower payment costs empowering further business spend

Payments made via open banking are not only quicker, they are cheaper. As they’re not associated with cards they’re not subject to the usual scheme fees that come with card payments.

While open banking payments are not completely charge free, they are more cost effective than card payments, meaning that the more payments your business makes, the greater your savings are.

These savings can now be put into growth areas of the business such as new staff, supplies or software.

Many SMEs have begun using open banking to their advantage already, but we’re very much at the beginning of adoption. Unlocking the power of open banking now not only gives businesses a way to solidify their chances for growth, but a way to stand out against competitors.

In the near future, offering open banking may be less about standing out, and more about catching up.


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