Oct 28, 2024

28 Oct 2024 Open Banking data has been a “powerful tool” for the UK’s SMEs, but the shift to Open Finance and Smart Data will provide a “more full picture” to ensure businesses get “better outcomes for themselves”, according to Yapily’s Nicole Green. Green, who is vice president API products, strategy, operations and policy at the Open Banking infrastructure provider was speaking at a panel discussion on Day Two of Open Banking Expo UK & Europe. Speaking on the Main Stage on 16 October, Yapily’s Green was joined by Emma Zaraisky, payments partnership development manager at Google and Sophie Hossack, Allica Bank’s head of partnerships for the session titled ‘Fueling SME growth and innovation through Open Banking’, during which they also discussed the potential to improve the payments experience for SMEs and their customers. “Getting that visibility of cashflow, understanding and aggregating accounts has been something that’s been very powerful as a tool,” said Green, when asked how Open Banking is already supporting SMEs to scale and grow. “There’s a lot of opportunity that’s coming. CFIT had the SME Lending Taskforce. I think there’s starting to be this look at how can we bring in both the current account, but also the credit card data, as a data point to use in a lending decision.” She added: “And then that expansion into other data sources that will be coming with Open Finance, hopefully, and Smart Data in general to usher in a more full picture. So that businesses can really understand fully where they stand, and then take that information and use it to get better outcomes for themselves.” Google’s Zaraisky said: “[At] Google when we make an assessment on a user – particularly financing for ads, how much we’re going to give them to start – data can really help us build that picture of potentially opening up… a higher limit to start with.” According to Zaraisky, 60% of its customers are SMEs, many of which are “not a known brand name”. However, she said that Open Banking data can help to “build that full picture of the user that we have and make sure we can best serve their needs”. Hossack said that cashflow, paying employees and suppliers, raising invoices, and “actually being paid yourself” are among the daily stresses and concerns for business owners and are all “time-consuming” administrative tasks. She continued: “So, if we start with the challenges around how do we help businesses get paid faster or make payments faster, as an example, even understanding where they stand as a business, understanding the information that they’ve got – how accurate is that? Can they make good decisions because of that? Are they working with an advisor who can help and support them make that decision? “All of those are the challenges that they’re experiencing and the ways that Open Banking can help.” Speed and UX in payments The panel went on to talk about payments and payment initiation, and to consider how new methods of paying will make a difference to SMEs and their customers. Zaraisky said: “A lot of times what we see when we’re working across any payment method is the number of screens can increase exponentially and, therefore for an SME, if you can bring this [the payment] into their product, you have a customer there that has a willingness to pay. “I’ve been through [payment] flows where I’ve clicked three times – ‘yes, I want to pay. I want to pay’ – and I haven’t actually quite got to the payment. “The chances I come back could be very low. But if you’ve brought it all into one place, that UX improvement could be quite a game changer and just making sure they capture the sale as well.” Zaraisky added: “So, I think both speed and UX improvements are potentially where Open Banking payments can really help out for SMEs.” Green suggested that, up until now, much of the focus has been on consumer-to-business payments. “For that, single payments works, and it works for business-to-business as well. But there are other optional APIs that are out there. For example, you can do file payments, or we call them bulk payments. You could use that to pay invoices, you could use that to pay payroll, depending on how many employees you have,” she added. “The really good news is that we’ve been talking to some banks about these APIs and they’ve made a commitment that they’re going to be looking at improving them in the next cycle of development that they do.” Hossack spoke about the issue of late payments in the UK, citing the statistic that SMEs are owed, on average, £22,000 in late payments and that every quarter in 2022, 52% of SMEs suffered from late payments. “Understanding why late payments happen, who is responsible for it or who is more likely to be responsible for it, is important because there are a number of different factors that clearly are at play here,” she told attendees, adding that Open Banking has the “potential” to significantly improve the situation. Share