UK firms embrace open banking for 150-hour annual savings

UK firms embrace open banking for 150-hour annual savings

UK enterprises are recognising significant yearly operational savings by integrating open banking into their systems, a recent survey has disclosed.

The study, which focuses on the impact of open banking on UK businesses, highlights that companies utilising this technology save an average of 150 hours annually on tasks such as invoice processing, managing financial data, handling recurring payments, and issuing refunds.

The research conducted by Payit™, a NatWest initiative, surveyed leaders from 150 UK businesses each boasting an annual revenue exceeding £2 million. Findings reveal that open banking is not just cutting down the hours spent on financial management but is also slashing payment processing costs and enhancing customer experiences.

On average, business leaders who have adopted open banking as part of their payment systems spend about 44.5 hours monthly on finance-related tasks. In contrast, those not using open banking invest over 57 hours. This difference amounts to a saving of more than 150 hours throughout the year, equivalent to over four standard working weeks.

Financially, the perks of integrating open banking are evident. Annually, businesses not utilising open banking incur an additional £1,687 on payment processes and £1,117 more on card processing fees, marking an 8% higher expenditure compared to those employing open banking solutions.

Open banking, now in its sixth year, has seen its prominence surge among UK firms, with a striking 97% reporting some awareness of the technology. The survey indicates a correlation between a company’s revenue and its familiarity with open banking, noting a decline in awareness as revenue decreases.

The essence of open banking lies in its ability to securely integrate third-party apps and services, offering new payment tools, automated financial management, and instantaneous updates. These features collectively contribute to a reduction in the time spent on operational tasks.

Industry specialists argue that the adoption of open banking extends benefits beyond time-saving. It provides access to real-time data, fostering more informed decision-making, and introduces efficient tools for managing payment-related tasks. This claim is substantiated by the research, which illustrates that businesses leveraging open banking face fewer challenges with typical finance-related tasks. For instance, only about 26% of open banking users consider late payments a major concern, as opposed to the 42% of non-users who view it as a significant issue.

Businesses believe that real-time data access through open banking could revolutionise customer experiences (39%) and streamline payment processes, thereby reducing operational costs (37%). Nevertheless, the adoption of open banking is not without its hurdles. The survey uncovers that nearly half of the businesses (48%) are apprehensive about cybersecurity risks, despite open banking’s adherence to Finance Grade API specifications and regulation by the FCA or a National Competent Authority.

PayIt CEO Mike Elliff comments on the findings, “It’s encouraging to see UK businesses embracing open banking and benefitting from the operational and cost efficiencies it can bring. We hope to see this awareness and adoption of new payment solutions grow and would encourage businesses to give it a go.

“While the concerns around security and fraud are apparent in this research, businesses can be confident that open banking is based on the security inherent in your online or app-based bank account. Wider understanding of this could help tackle barriers to implementation and open opportunities for businesses to lower operational spend and move closer to their objectives.

“As the financial landscape evolves, companies embracing the technology stand to gain a competitive edge in the ever-changing business environment.”

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