B2B Payments

What Open Banking Means For China, Challenger Banks And SMBs

bank data online

Small businesses continue to embrace digital banking. At the same time, digital banks are looking to capitalize on their growing small and medium-sized business (SMB) customer base, with open banking and bank-FinTech collaborations an important part of that strategy. Such data sharing and partnerships enable service providers to augment their products for better user experiences, and increasingly, small businesses aren’t keeping quiet about their demands for richer banking services.

Below, PYMNTS looks at the latest developments in open banking and bank-FinTech collaboration, including a look at how data sharing drives challenger bank competition, China’s exploration of open banking, and FinTechs embracing data connectivity to broaden their small business services.

Open Banking Drives Challenger Bank Adoption

The U.K.’s Open Banking mandate is designed to foster competition by unlocking bank data for third-party service providers. For the growing number of challenger banks in the market, open banking may just be an important driver of adoption of digital financial institutions (FIs), a recent PYMNTS report noted, pointing to Revolut as the latest challenger bank to embrace open banking. The company recently debuted its data aggregation feature designed to provide a holistic view of customer finances across the various tools they use.

China Dips Its Does Into Unlocking Data

Open banking may seem like an inevitability in any market, but in China, the path to unlocking bank data may be more complicated. As William Carter, deputy director and fellow for the technology policy program at the Center for Strategic and International Studies, recently told PYMNTS, “China is viewed externally as a country where privacy is not expected and not thought about, but I do not think that accurately reflects how it is viewed within China.” Carter observed, “What we have seen over the past few years has been a growing emphasis on data privacy and, particularly, some nod toward user empowerment — and so that has been reflected in some of the privacy regulations that have come out.”

Implications on data security in the financial services market are particularly sensitive, he added, particularly as the government looks to reign in shadow banking. Further, considering the size of China’s market, and the weight of its regulatory presence, financial service providers must ensure that they fully understand the climate as open banking expands in the market.

Enfuce Tackles Fraud In Open Banking

Open Banking FinTech Enfuce this week announced a partnership with financial crime and fraud management company Featurespace. Enfuce will use Featurespace’s ARIC Risk Hub to extend its fraud protection capabilities to Enfuce’s own clients, including banks and merchants. In the announcement, Enfuce pointed to rising fraud risks, which is of particular concern in the context of open banking and data sharing.

“Risk exposure and criminal behavior is constantly growing and we must collaborate more effectively to outsmart them,” Featurespace CEO Martina King said in a statement.

Fifth Third Bank Taps FinTech For SMB Lending

As part of the U.K.’s bank referral scheme, banks are required to refer small businesses that have been rejected for a loan to an alternative lender. Fifth Third Bank recently revealed that it will do so in partnership with alternative lending platform Fundation, a bank-FinTech tie up designed to expand access to capital for small businesses.

“At Fundation, our mission is to enable our banking clients to give their small business customers the best of both worlds — great products at great prices along with the modernized experience they expect in the digital era,” said Sam Graziano, CEO of Fundation. “This collaboration does exactly that.”

Centsoft Integrates With QuickBooks Online

More FinTechs embrace the opportunity to collaborate and integrate data with each other, with small business accounting platform QuickBooks Online one of the biggest adopters of this opportunity. In the latest integration, Centsoft announced its accounts payable automation solution is now integrated into QuickBooks Online, enabling small businesses to manage supplier invoices in both the Centsoft and QuickBooks portals, with all information changes in Centsoft automatically updated within QuickBooks.

“Centsoft integrates with Quickbooks and everything you do in Centsoft is seamlessly updated,” explained Michael Cichy of Centsoft. “Centsoft automatically records important settings including the vendor register, vendor accounts, and currency.”

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