Businesses have failed to reap the benefits of open banking due to a wariness about sharing financial data, a new report has revealed.
Open banking, which enables sharing of financial information with other banks and finance providers, was introduced in the UK two years ago in a bid to boost consumers and small businesses.
The system is designed to help business owners manage cashflow, secure improved deals on financial products and services and reduce recurring costs such as utilities.
However, the majority of businesses are “wary” about sharing banking data electronically and only a small proportion have made use of open banking, according to the Federation of Small Businesses (FSB).
A new survey revealed that just 15 per cent of small firms are currently sharing their business bank account data electronically with third parties, and most of these do so to update accounting software.
Roughly two-thirds of companies surveyed said they would not consider using open banking. Four in 10 of these said they believed sharing banking data online was unsafe, while a similar proportion said they were “unsure about the benefits” of doing so.
“We’ve always said that – done right – the benefits of open banking will be huge,” said FSB national chairman Mike Cherry.
“However, the financial crash casts a long shadow. A lot of small business owners still don’t trust lenders to do the right thing.”
The FSB called on the Financial Conduct Authority to ensure open banking interfaces were “absolutely watertight” and urged the regulator to raise awareness of the benefits of the system.