Consumers are not alone in their reluctance to embrace the open banking revolution; businesses are also failing to sign up due to concerns about sharing their financial data.
So says a new report from the Federation of Small Businesses (FSB) published this week. It marks the second anniversary of the launch of the scheme, which requires UK-regulated banks to share their customers’ financial data (with permission) with third party providers through APIs.
The idea is to make it easier for bank customers to access financial services and for start-ups to develop new products.
For the business sector, open banking is designed to help owners manage cashflow, secure improved deals on financial products and services and reduce recurring costs, such as utilities.
However, the FSB study reveals the majority of businesses are wary about sharing banking data electronically and only a small proportion have made use of open banking.
In fact, just 15% of small firms are currently sharing their business bank account data electronically with third parties, and most of these do so to update accounting software.
Meanwhile, nearly two-thirds of those surveyed said they would not even consider using open banking, with four in ten saying they believed sharing banking data online was unsafe, while a similar proportion said they were “unsure about the benefits” of doing so.
FSB national chairman Mike Cherry commented: “We’ve always said that – done right – the benefits of open banking will be huge. However, the financial crash casts a long shadow. A lot of small business owners still don’t trust lenders to do the right thing.”
On the back of the report, the FSB has called on the Financial Conduct Authority to ensure open banking interfaces are “absolutely watertight” and has urged the regulator to raise awareness of the benefits of the system.
According to predictions by PWC, 64% of adults will use open banking technology in some way by 2022, but YouGov research from 2018 indicated that 72% of adults had not heard of open banking.