OBIE report shows open banking and cloud accounting benefit SMEs
The Open Banking Implementation Entity (OBIE) has published its latest report which shows small and medium-sized enterprises (SMEs) find cloud accounting improves efficiency and profitability.
The bi-annual report, titled the Open Banking Impact Report, assesses the progress of open banking adoption in the UK and its impact on consumers and small businesses.
In its third edition, the report focuses on a new element – how small businesses are utilising cloud accounting.
Cloud accounting lets businesses manage accounting tasks such as managing cashflow and issuing invoices through cloud-based software and open banking, which gives companies the ability to connect their bank account to their chosen accounting service.
The report notes that even though cloud accounting services pre-date open banking, 75% of users started using these services no more than three years ago, with 36% having adopted it within the past year.
Open banking started to be incorporated into cloud accounting from April 2019, as one of the earliest propositions, with 11% of respondents claiming they would stop using their cloud accounting package and 50% would look for an alternative if they lost the ability to incorporate real-time transactions.
“Open banking is clearly a valued feature among adopters,” OBIE states.
Some of the report’s key findings include:
- Given cashflow pressures, 77% of respondents stated they now have more immediate and accurate insights into their financial position at any given time as a result of using these services.
- Cloud accounting makes small businesses feel more efficient, according to 84% of respondents.
- The service is beneficial when it comes to managing late payments, with 70% of respondents saying so.
- Some respondents believe cloud accounting is saving them money, with 59% saying it had delivered internal savings and 64% claiming external cost savings.
- Over four in 10 small businesses reported they no longer needed external accountancy support.
“Cloud accounting software has been around for a few years, but it’s interesting to see the positive feedback from businesses, small and large,” says Charlotte Crosswell, chair and trustee, OBIE.
“Open banking is making the service more effective and helping businesses keep on top of admin and managing cashflow.
“There’s certainly more work to be done to encourage sole traders and smaller businesses to adopt it, but it is encouraging to see the value it is adding.”
OBIE was set up in 2016 by the Competition and Markets Authority (CMA) to develop the open banking ecosystem. It is funded by the UK’s nine largest banks, collectively known as CMA9. In February this year, it appointed its first CEO.