B2B Payments

Codat Pulls SMB Accounting Into The Open Banking Fold

Small business (SMB) accounting FinTech Codat is teaming up with five°degrees to join its Open Banking partnership, according to Verdict on Tuesday (Oct. 15).

London-based Codat, which enables small businesses to integrate their back-office platforms via application program interface (API), will join five°degrees’ Open Banking Marketplace to support collaboration and integration between traditional banks and FinTech firms. Codat Co-founder Alexander Cardona said the company’s efforts to embrace “Open Accounting” is to support a stronger overall small business banking experience.

“Taking an ‘Open Accounting’ approach enables banks to have greater access to real-time accounting data,” he said in a statement. “This helps banks provide faster and more accurate lending decisions for small businesses, while managing risk effectively. With the ability for banks to make quick lending decisions based on real-time insights, [SMBs] feel valued, and [lengthy] paper-vetting processes are avoided.”

In another statement, five°degrees Executive Vice President of Business Development Peter-Jan Van De Venn said that collaboration with Codat means “providing unrivaled customer experience via our Open Banking Marketplace, helping banks and financial institutions to provide for lending solutions, and take advantage of the [SMB] market opportunity.”

Open Banking frameworks and APIs are a growing part of small business banking in the U.K. and elsewhere.

In June, Mastercard launched an Open Banking platform in an effort to promote API standardization — in support of bank-FinTech integrations. That same month, business payments company Bottomline Technologies introduced a suite of services for banks, including an Open Banking API, to support collaboration.

Last month, PYMNTS spoke with small business Lending-as-a-Service provider StreetShares’ Co-founder and CEO Mark Rockefeller. He said that the small business bank loan industry could usher the U.S. toward Open Banking, as Banking-as-a-Service providers targeting the SMB lending process begin to integrate with banks’ existing systems.

This is particularly true as competition in the space grows, with the entrance of non-banks into the SMB lending space, he added.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.