Every small business has a bank account and could not operate without the support of banking services , however the process of choosing a bank, opening an account and making sure you are getting the best deal is at best time consuming and in most cases frustrating. In February 2016 the Competition and Markets Authority (CMA) published an order requiring the UK's largest banks to develop and adopt an Open Banking API (Application Programming Interface) as part of making it easier for small businesses to compare bank accounts and loans, open accounts and switch accounts.
So, what is Open Banking?
Open Banking enables the sharing of personal and financial information securely, without you having to reveal your password. This is the same technology that tells an Uber driver who and where you are or which lets you sign in to other online accounts using Facebook. For small business owners this will allow you to find the best deals for your business accounts and get loans by accessing the detailed financial information required to understand your business in enough detail to provide a quote.
What does Open Banking mean for small businesses?
- Business bank accounts will be easier to open and it will be easier to switch bank accounts
- Banks will notify you when you come to the end of your free banking period
- Banks will be more transparent about the true cost of loans, overdrafts and bank accounts
- Banks will publish service quality ratings for their products
- Banks will provide a loan price and eligibility tool so you know how much a loan would cost and if the bank will approve you, before applying
- A prize fund will be run to find someone to build a new comparison website for small businesses
For more information on open banking here’s a link to a blog post by our CEO written for Nesta.
Open banking has the potential to unlock access to better products at better rates, faster! It will empower consumers and small businesses to use their data to access better services. Open Banking will give you more control over your company’s financial data and who this data is shared with. But to be able to make the most of open banking, you need to be well informed on your businesses financial health.
How Handle can help you get more from banking and finance
Before applying for financial products it is always a good idea to have a view of how banks and lenders assess your business, so there are no surprises.
To make the process of evaluating your financial health easier Handle shows you your business credit score and the state of your financial affairs all in one place. The credit report gives you access to all the information you need to view your business through the eyes of your lenders. It compiles your credit score, unsatisfied CCJs, total amount of debt and more. The finance report lets you see if your accounts are up-to-date, the value of your fixed assets and your liabilities. With all of this information you will be able to see what elements are bringing down your credit score or weakening your financial health.
For example within your credit report, if you have unsatisfied CCJs this will be lowering your overall score. Lenders like to know that you are going to repay your loans and if you have a number of unsatisfied CCJs your business looks like a risk. On the other hand if you have evidence of repayment you will be able to build a level of trust with your suppliers, allowing you to negotiate better payment terms.
For more information on how to use your credit and finance reports to your advantage, check out the links below:
- Handle Credit report: Get better payment terms
- Handle Finance report: Monitor your business financial health
The first stage of Open Banking will be completed this year with the ability to share your transaction history with other banks, lenders and partners like Handle available from early 2018.
If you have any questions about the Handle finance and credit reports you can get in touch with us at firstname.lastname@example.org
Handle helps you put your business's digital profile to work. Reach more customers, get more sales, save money and get better payment terms.