B2B Payments

Not All SMBs Are Open To Open Banking

Despite any possible reservations early on, large financial institutions (FIs) now appear to be going all in on Open Banking, with plans to introduce new revenue streams as a a result. Key to their Open Banking plans are their corporate clients, according to new research from Accenture, which surveyed more than 750 executives across global banks, large corporations, and small- to medium-sized businesses (SMBs).

The report, “It’s Now Open Banking, Do You Know What Your Commercial Clients Want From It?,” published Wednesday (Nov. 28), found that the vast majority of large FIs (90 percent) plan to introduce Open Banking services for their commercial clients. Most of them expect these services to generate a 10 percent increase in revenues, and an additional one-third expect revenues to jump by 20 percent.

Investments are significant, with 71 percent of FIs saying they would invest up to $20 million in Open Banking solutions. Nearly a quarter plan to invest even more. The financial returns on investment (ROIs) in Open Banking will only be realized, though, if banks focus on what their corporate customers want.

According to Accenture analysis, corporate bank customers said they are seeking enhanced customer services and more innovative solutions similar to the demands among consumers. Access to convenient banking services is the top benefit for corporates to gain from Open Banking, both large enterprises and SMBs agreed.

Payments, finance and cash management were also chosen as areas that both large firms and SMBs said could be improved as a result of their banks’ Open Banking efforts.

“While the discussion around Open Banking to date has centered on retail banking consumers, we found that commercial customers are looking for much the same things from their bank,” said Accenture Senior Managing Director for Banking Alan McIntyre in a statement. “Open Banking provides banks an opportunity to use platform ecosystems to deliver more and better services, including helping their [SMB] and large corporate clients extend their market reach and leverage cutting-edge banking services.”

Not everyone is convinced of the benefits of Open Banking efforts, however. According to separate research from KPMG and research firm 3GEM, SMBs may be more skeptical about Open Banking solutions than some previously thought.

KPMG and 3GEM announced their own report earlier this week, which surveyed 1,000 U.K. SMBs about their attitudes surrounding Open Banking and, specifically, its reliance on data sharing between banks and third parties. While one-third of SMBs said they are “wide open” to Open Banking, one quarter said they are just the opposite and would not allow sharing of their financial data under any circumstance.

“Open Banking is yet to deliver the competition the regulator intended, and a large segment of the population has yet to be convinced by its potential,” said KPMG U.K. Partner John Hallsworth in a statement. “But the [SMB] market has the potential to kick-start the Open Banking revolution.”

Still, there is evidence that small businesses do find some potential in Open Banking, particularly in certain industries. Companies within the technology, telecommunications, banking and manufacturing sectors were found to be the most interested in Open Banking, KPMG’s report found.

For companies that remain on the fence, improvements to payments, invoicing, business account management and taxes will be the most effective in convincing them to open up their data to share between banks and third-party applications. Solutions that save companies a significant amount of money were also cited as a key factor in SMBs being open to Open Banking.

According to Accenture’s McIntyre, competition in the financial services market from FinTech firms and traditional banks could be an important piece of the puzzle to ensure service providers are introducing solutions that small businesses will actually want.

“There’s an influx of nimble, non-bank digital newcomers using Open Banking innovation to woo commercial firms from their traditional banks,” he said.

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