Small businesses remain unaware of the benefits of Open Banking – meaning a small push from their accountant could influence them into adopting the financial service.
Small businesses lack awareness of the banking revolution, two years after the introduction of Open Banking, new research led by Intuit Quickbooks has revealed.
While most small businesses owners have heard of Open Banking, almost half are unable to explain the term or do not fully understand its meaning, according to the study. Nearly half of respondents (48%) also do not believe that technology will impact their business, despite the improvement it could provide to business cash flow management.
Poor cash management remains the key reason for small business failure in the UK, but there is hope for this to change. Small business owners believe that an additional push would influence them into adopting Open Banking, with 59% seeking information on what it consists of and how it can impact their business.
Rob Burlison, Director of Corporate Affairs at Intuit QuickBooks said: “Today’s 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.
“Cash flow remains the number one reason for small business failure and with half of businesses that start in the UK still failing within the first five years, Open Banking is a great opportunity to help more small businesses in the UK thrive.”
Open Banking allows businesses to see their finances in one place, meaning they remain up to date with their cash flow and build the resilience of their business against unexpected financial shocks.
However, only a quarter currently say they would value having full visibility of their business’ financial health in a single place.
Burlison added: “Ensuring that we can provide a best-in-class financial management solution through fully open APIs is just the start of what QuickBooks is offering small businesses.
“The birds-eye view of their financial position, alongside the machine learning capabilities of our software, will help small businesses get that much closer to mastering their cash flow and thriving for years to come.”
As a result, accountants will have a significant influence in encouraging business owners to embrace opportunities offered by Open Banking, where small business owners are more likely to ask support from their accountant than any other source.
QuickBooks has started to integrate its accounting software with several digital banks such as Revolut and Monzo as an attempt to save small business owners time whilst promoting both accuracy and efficiency in financial data for bookkeeping.
„Though Libra has met with fierce resistance from central banks and supervisory authorities and might never see the light of day, in many other cases tech firms (both start-ups and established big players) have successfully captured bits and pieces of universal banks’ traditional value chain. This trend may only intensify in the coming years. In this environment, European banks remain squeezed.”