B2B Payments

SMBs Remain Hot Spot For Open Banking Business Models

Open Banking Continues SMB Focus

As the open banking business model permeates into the B2B financial services market, FinTechs and traditional financial institutions continue to find new use cases for API integrations and connectivity to elevate the business-user experience.

Yet a new report from Intuit Quickbooks suggests many small to medium-sized businesses (SMBs) may not even be aware of this banking revolution.

Recent reports in Accountancy Age said SMBs are largely unaware of open banking, with Intuit Quickbooks finding in a survey of U.K. SMBs that nearly half (48 percent) said they don’t believe technology will impact their business.

Intuit QuickBooks Director of Corporate Affairs Rob Burlison said the research “shows that small businesses are in danger of missing out on the massive benefits open banking could bring.”

“It is clear that as an industry we could do more to assure businesses of the security measures in place and demonstrate the tangible benefits of open banking and connected technology,” he added. “Cash flow remains the No. 1 reason for small business failure, and with half of businesses that start in the U.K. still failing within the first five years, open banking is a great opportunity to help more small businesses in the U.K. thrive.”

Although SMBs may not be aware of the technological business models behind it, the open banking trend is expanding in the U.K. and beyond to introduce a range of new products and services for the SMB user.

Below, PYMNTS rounds up the latest in open banking initiatives and technological integrations forming to improve SMB financial services. While open banking is key to bank-FinTech collaboration, data integrations and partnerships between FinTechs themselves continue to be a popular strategy to boost SMB finserv.

Just Cashflow Taps Ebury for FX

In the latest demonstration of FinTech-to-FinTech integration, U.K. SMB lender Just Cashflow announced a partnership with Ebury to integrate foreign exchange services as Just Cashflow augments its offering beyond SMB loans.

John Davies, executive chairman of Just Loans Group (of which Just Cashflow is a subsidiary), pointed to the “unprecedented upheaval” of today’s business climate and the pressures that SMBs are facing as a result of their international expansions.

Ebury is integrating foreign exchange (FX) tools to support Just Cashflow’s SMBs and their cross-border payments needs. It’s an integration that reflects how data integration strategies can not only help traditional banks to better meet clients’ needs, but also help FinTechs compete against banks. According to Just Cashflow, 70 percent of SMB owners say their existing banks do not adequately meet their needs.

Eika Group, EedenBull Team for Banks

In Norway, banking group Eika Group announced an investment in and collaboration with EedenBull in an effort to help traditional financial institutions in the region strengthen financial services to business clients.

Eika Group will connect member banks to EedenBull’s range of tools, including employee expense management and business card spending solutions, so they can link those technologies to their customers.

CEO Terje Gromholt of Eika Kredittbank said “it is important to create partnerships with players who possess [specialized] expertise in their areas, as the collaboration with EedenBull is an example of.”

Penta Integrates SumUp’s POS

In an effort to attract more offline SMB customers, Germany-based challenger bank Penta is teaming up with SumUp with a focus on data integration.

TechCrunch reported that Penta will connect its SMB customers to SumUp, providing them with a card reader that is integrated into their Penta accounts for seamless transaction recording and reconciliation.

Reports noted that Penta plans to expand that integration further, allowing SMB clients to wield transaction data that passes through the SumUp POS to forecast future sales and support credit underwriting when seeking a loan.

SMB Accounting App Coconut Opens to Banks

U.K. SMB accounting FinTech Coconut recently revealed its open banking initiative, allowing its SMB users to connect their bank account data into the Coconut platform regardless of which financial institution they use.

The company emphasized the opportunity open banking presents to promote automation for the SMB community.

“There are over 5 million self-employed people in the U.K., and they are all losing money unnecessarily because they are spending too much time on manual bookkeeping tasks,” said Coconut CEO and Co-Founder Sam O’Connor. “Now they don’t have to. Open banking provides a solution for this, and, for the first time, even if people have accounts with other banks, they will be able to use Coconut to manage their money, finances and taxes effortlessly.”

Alliance Bank Taps Into Ephesoft Data Capture

Data capture technology firm Ephesoft recently struck a collaboration with Alliance Bank Malaysia Berhad in the latest example of how bank-FinTech collaboration is a strategy that’s quickly spreading around the world — and of how integrations are supporting the financial service providers themselves, too.

The tie-up will see the Malaysian bank, which targets SMBs, integrate Ephesoft Transact into its own back-office operations to strengthen its fraud detection and compliance processes.

“With this improvement, we have the capacity to quickly identify and manage any potentially fraudulent activities based on customers’ transactional behavior,” explained Alliance Bank Group CEO Joel Kornreich. “We also use the information to perform financial casting to understand our customers better, and due diligence in assessing customers.”



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.