The Small Business Financial Landscape study found that 50 per cent are now using open banking providers
More small businesses are adopting – and benefitting from – open banking during the Covid-19 crisis, research from the Competition and Markets Authority has found.
The Small Business Financial Landscape study, which surveyed 500 businesses with fewer than 50 employees, found that 50 per cent are now using open banking providers.
Almost three in five started to use these services in the past six months, with 90 per cent saying that their interest in open banking was a direct result of the pandemic.
24 per cent of small businesses now use cloud accounting which allows businesses to manage their accounts and invoices online; while 21 per cent are using cashflow forecasting tools.
Companies using these products were positive about the benefits they have brought to their businesses.
41 per cent of small businesses who use cloud accounting said it has reduced the administrative burden of paperwork, while cashflow forecasting customers (27 per cent) said it had helped them to understand their businesses better.
Despite the coronavirus-induced recession, 31 per cent of small companies expect growth over the next 12 months, while 35 per cent believe they will remain stable.
Small businesses said the biggest challenges they had experienced, and expect to face, are cashflow being difficult to manage (19 per cent), managing finances due to monthly changes in income (17 per cent) and applying for lending (10 per cent) in case their application is declined.
It is encouraging to see the UK’s small business community recognising that open banking can help to become more resilient, productive and profitable, said Constanza Castro Feijoo, small business engagement spokesperson for the Open Banking Implementation Entity (OBIE).
Feijoo said, from cloud accounting and sophisticated cashflow management platforms to reducing fees, businesses can improve their financial management and, therefore, their ability to cope with the change when cashflow becomes tight.