The Value of Information Sharing in the Finance Field

In the past, the idea of sharing financial information on a mass basis seemed completely alien to SME owners and finance teams.

It appeared to go against all data protection guidelines. The introduction of open banking changed all that.

The Competition and Markets Authority (CMA) instigated open banking two years ago to promote innovation and competition in the banking and financial services sector. The system allows individuals and SMEs to share account details, payments, and other financial information with financial services providers.

The reasons behind open banking

The creation of an open banking system in the UK makes it easier for information in the finance field to be shared. This gives financial services providers the opportunity to innovate in order to offer valuable services to individuals and organisations.

As part of the system, the nine largest banks in the UK have to share financial information with authorised third parties when customers request them to do so. This sharing culture has created an environment in which organisations work together. This provides benefits across the financial sector and is a valuable asset to individuals and SMEs that have greater control over their financial data and can use it beneficially.

All providers who use open banking to provide products and services must be registered by the Financial Conduct Authority (FCA). This creates an environment of simple but secure access to data that helps people and organisations to make better informed financial decisions.

Benefits of open banking in business

Many UK businesses are yet to take advantage of the opportunities that open banking presents. Creative and forward-thinking finance professionals understand that their businesses should recognise the benefits of open banking and embrace them. For example, open banking opens the door on:

• Intelligence-driven financial decisions. This reduces stress and administrative pressures for SME owners and finance teams.
• Banking as a service (BaaS). Banks will become more intelligent and only involve business owners in making decisions that have real meaning and value. This removes the requirement for owners and their finance experts to become involved in demanding administrative tasks. As a result, time is released to be used for essential business functions, such as financial strategy and budgeting decisions.
• Improved ownership of financial data. Using open banking and related services gives business owners the opportunity to control their data and how it’s used. They can choose to customise the financial services and products they use in order to achieve a higher level of success.

Sharing information in the finance field is something that would not have been considered in the past. Now, open banking gives SME’s the opportunity to control their data and use it in a way that brings the most benefit without relinquishing security. This presents them with a greater amount of freedom and removes some financial administration pressures which banks take over. It’s certainly an advantage that helps create an informed and data-driven future for businesses in the UK.

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