SMEs and Open Banking

PwC forecasts that 71 percent of SMEs will use open banking by 2022. In the UK alone, 2019 saw 5.6 million SMEs worth £2trn employ 16.3 million people. This is a hefty part of the private business sector so it’s no wonder that fintech companies are focusing a lot of their energy on cornering the SME market, especially when it comes to loans and repayments. This emphasis on open banking products and services should also see SMEs growing more rapidly. Here are a few companies who have designed products which are especially appetising to SMEs.

Iwoca is working with the big banks such as Barclays, HSBC and Lloyds to implement APIs that will help their SME clients borrow money quickly and easily. ClearBank and Tide, two challenger banks, have partnered to create a service which brings lenders, SMEs and debtor insurance companies together. The idea is easy lending with less risk. Starling Bank is also working on new lending products which are powered by open banking and help SMEs to take out loans quickly automatically and securely. Funding Options matches SMEs to the most suitable lenders by utilising data in the open banking marketplace. It’s totally free for SMEs to use and features more than one hundred lenders, meaning SMEs have access to the right solution for their business model.

This is just a snapshot of the companies providing specialised services for SMEs and lending is just one way in which fintechs are helping smaller firms grow. Accounting apps which use open banking APIs to help SMEs keep on top of anything from taxes to employee expenses are also competing for a slice of the business. Late payers are a huge problem for an SME’s cashflow. Open banking apps can help them monitor this issue and stay on top of it. Keeping these areas under control means SMEs can spend less time on accounting and more time on driving revenue up. 

Pay iO’s articles do not constitute financial advice and are for information only.