Open banking held back by lack of trust among small business
Small firms have said they are not seeing any benefits two years on from the introduction of open banking in the UK.
Small firms have called on the government, banks and the incoming Financial Conduct Authority (FCA) boss to cement benefits of open banking with targeted awareness campaign.
On occasion of the second anniversary of the implementation of the Second Payment Services Directive (PSD2) in the UK, FSB has released new figures highlighting the minimal impact of the legislation to date.
According to the FSB, more than 1,000 of its members find that fewer than one in seven (15 per cent) small firms are currently sharing their business bank account data electronically with third parties. A big share (87 per cent) do so to update accountancy software.
Around two-thirds (65 per cent) of small firms say they would not consider sharing their banking data with other financial services providers electronically. Among this subsection of firms, four in 10 (43 per cent) believe that sharing banking data in this way is unsafe, while a similar proportion (37 per cent) are ‘unsure about the benefits’ of such activity.
The overwhelming majority (85 per cent) of smaller business owners who would not consider sharing their business bank account data with other financial services providers electronically are ‘wary’ about doing so.
“We need to see a concerted effort from the government, banks and the FCA to ensure that open banking application programming interfaces are absolutely watertight, and small business owners are fully aware of the benefits of using them. Key to this is awareness-raising, and clarity around who is responsible for cyber security breaches and protections for smaller firms," said FSB national chairman Mike Cherry.
“The incoming head of the FCA should make this a top priority for their tenure. There’s still time yet for a small business banking revolution.”
Mr Cherry explained that, done right, the benefits of open banking will be huge.
"Giving small businesses the ability to integrate cashflow, invoice, payroll, utilities and tax data in one place means giving them the ability to identify new efficiencies," he said.