Open Banking - how SMEs can benefit and what to look out for

Stephen Whelan, Direct Sales Manager at Spotcap UK, underlines the benefits of open banking for SMEs.

Open Banking are sweeping new rules which enable consumers and businesses to share their banking data with third parties. From 13 January 2018, Open Banking will apply to current accounts, with a managed roll-out of other services to be completed by March 2018. Ahead of the launch, Stephen Whelan, Direct Sales Manager, at Spotcap UK, comments:

"Open Banking will break down the monopoly banks are currently holding over their customer data and allow other players such as challenger banks, alternative lenders and other third-party technology providers, to enter the scene.”

But what does it mean for small and medium-sized businesses? “Open Banking can be beneficial for SMEs as it will lead to streamlining certain banking and accounting functions”, says Whelan. "For example, by directly connecting to a company’s bank account information, accounting processes or credit assessments will be done much faster, more efficient and more accurate.”

However, according to Whelan, the introduction of Open Banking has also raised a number of security concerns: “Although Open Banking can make money management easier for businesses overall, rogue firms can potentially misuse information or pass it on to unauthorised third parties. Therefore, there is a need for judicious regulation to ensure that sensitive and business data remains safe."