Open Banking: how the new age of payments will benefit businesses
Open banking has changed the way that we pay for things, by offering peer to peer access and control of banking through third party applications. This collaborative model shares consumer data via an API, which in turn disrupts the existing payment systems whereby banks are the main source of payment networks.
With open banking, the consumer is able to take the reins and share financial information in a secure manner without having to go directly through a bank. In the past, open banking models have been able to build apps and services around banks in order to share payment information seamlessly. This has been great for the consumer, who has been able to directly purchase things instantaneously.
However, with the next phase of online banking due to take off in October/ November in the UK, it looks like businesses will start to really benefit from open banking too. Banks are set to release their APIs around this time, which will allow businesses to build their own payment platforms around it.
We’re taking a look at the top ways that businesses will benefit from this new age payment system.
How Will Open Banking Benefit Businesses?
Open banking is a great evolution in FinTech that is set to aid both the consumer and the business owner. It makes payments quicker and easier for everyone, and helps finance keep up with modern technology. Here’s how you can expect it to aid your business:
- It Will Make Payments Instantaneous
The main way that open banking will benefit businesses is by making payments instantaneous. This means there will no longer be a delay in taking payment, the transfer of funds will happen instantly. This is great for cash flow for both the consumer and the business.
- Credit Score Processing Will Be Speedier
Another major benefit for businesses is that open banking will allow you to view the financial activities of current and prospective customers. With open banking, this information is shared so that the business can create an accurate profile of each consumer. This means that businesses can make quick decisions about the consumer such as the credit possibilities and spending habits.
- Business Can Use The Data They Have
With open banking, building an accurate data profile of a consumer is made a lot easier. This means that you will be able to accurately predict how your customer might behave, which may inform business decisions. This is ideal for both parties, as the business can tailor a customer’s experience to their likes and dislikes.
- Small Business Loans Will Be Quicker
As a small business, getting access to extra income during these times can be essential to stay afloat. Small businesses who get on board with open banking should be able to get a loan more easily since credit lenders will be able to quickly and transparently view your books.
- Open Banking Makes Accounting More Simple
Manual tax returns are a thing of the past with open banking, that gives secure access to accounts. With integrated systems, you will be able to see payments sent and received and audit your accounts much more transparently.
- Reduced Payment Costs
Banks have always had to initiate payments on the card holders behalf, however with new APIs this will now be quicker and easier. One of the main incentives of open banking is that the payment costs are lower for merchants. This is because the new updates will make it easier and cheaper for third parties, and that cost saving will be passed on.
Open Banking For Your Business
Yoello is FCA Authorised for open banking, meaning that we can authorise and authenticate payment on behalf of a bank. This saves our clients and their customers both time and money, and means that they can put their best foot forward as industries reopen after the coronavirus setback.
Interested to learn what open banking could do for your business? Sign up to our emails and be the first to learn about our open banking products. Alternatively, read up on why the future of food service is now in our latest white paper.