The Open Banking wave that is delivering novel services to retail customers holds even greater promise for small- and medium-sized enterprises (SMEs) and large corporations.
Corporates are preparing for Open Banking
Based on findings from our recent Open Banking for Businesses Survey, 77 percent of SMEs and large corporations already participate in Open Banking ecosystem platforms or plan to do so in 2019. They expect to partner with third-party providers (TPPs) mostly around payments, expense management and B2B services and more than two-thirds are interested in joining Open Banking ecosystem platforms with banks.
Likewise, more than 80 percent of banks already significantly invest in Open Banking use cases for SMEs and corporates or plan to do so. Nearly 90 percent are ready to build an ecosystem platform with third-party services for their commercial customers. It’s an opportunity for both banks and corporates to expand their ecosystems and extend their reach.
Gaps exist between banks and corporates
As aligned as corporates and banks are about the value of Open Banking for commercial business, there is a disparity between what corporates want and what banks plan to provide.
In our survey, for example, SMEs cited payments and cash management as the top two areas of their business that could be most improved in partnership with their bank. It indicates an opportunity for banks to help SMEs streamline and integrate their business and administrative processes—such as accounting, bookkeeping, payments, taxation and cash management. Yet, banks expect to enable banking as a platform (33 percent) and finance (15 percent) as Open Banking-related value-added services for their SME customers. Only 10 percent cited cash management and nine percent stated payments.
Digital newcomers are eager to jump in and address corporates’ needs through Open Banking. Novel bank competitors—like LendingClub, Kabbage, Xero and Tide—are already using real-time data to offer more customer-centric bundled solutions on seamless platform-based ecosystems that interact with banks where necessary. Fintechs and ERP software providers—like Stripe for online payments processing and SAP for cash management-ERP integration—are looking to help corporates gain greater efficiencies in payments.
Time to give corporates Open Banking value
With only 45 percent of companies fully satisfied with their organization’s business software in regards to payments and banking, it’s time for banks to turn Open Banking innovation to corporates’ advantage.
Banks that manage to get out of their comfort zone and rethink the way they address their commercial customers can stay relevant to them and grow.
Four ways banks can use Open Banking innovation to their advantage