Press Releases

Adapting to survive: UK’s small businesses leverage open banking as part of COVID-19 recovery

07 December 2020

Increased adoption: New research produced by the OBIE together with Ipsos MORI shows that since the start of the pandemic, the UK’s small business community is increasingly utilising the services offered by open banking providers as they look to future-proof their business operations (50% of those surveyed).

  • Improved resilience: Of those who had leveraged these services, the majority confirmed its positive impact on their businesses, particularly in terms of making them more resilient.
  • Accelerated switching: While small businesses have historically been slow to change their banking current account [1], the research indicates a growing willingness to shop around for better deals, with 19% of respondents now switching across a range of products.
  • Small business borrowing: 46% of small businesses who are in debt have taken more than half of that debt in the last six months. 2 out 3 have taken advantage of government support schemes, and another 18% have accessed alternative lending. Yet 63% of those who have taken advantage of the government support schemes are concerned about their ability to repay.
See infographic based on the OBIE / Ipsos MORI research.

The Small Business Financial Landscape study was commissioned by the Open Banking Implementation Entity (OBIE), the body set up by the Competition and Markets Authority (CMA) to deliver open banking in the UK. The study asked 500 small business decision makers (defined as has having 2-49 employees) about the financial decisions they have taken since March 2020 to support their businesses in response to the COVID-19 pandemic.

Sharp increase in small business open banking adoption

Of the small businesses surveyed, 50% are now using open banking providers, with almost three-in-five starting to use these services in the past six months, of which 90% stated as a direct result of COVID-19.  Popular products include cloud accounting (used by 24% of small businesses), which allows businesses to manage their accounts and invoices online, as well as giving access to trusted third parties such as accountants. 21% are using cashflow forecasting tools, which use artificial intelligence to reliably predict how much money a business will receive and pay-out over a set period.

Users of these products were overwhelmingly positive about the benefits that open banking-powered services have brought to their businesses. For example, 41% of small businesses who use cloud accounting said it has reduced the administrative burden of paperwork, while cashflow forecasting customers (27%) said it had helped them to understand their businesses better.

Accelerated switching

Interestingly, a higher proportion of small businesses who have adopted open banking products have switched their banking current account (17% vs average 10%) and are more likely to change their bank account in the next six months (31% vs average 20%).

Historically, customer switching within the retail and SME markets has been low. The CMA’s 2016 Retail Banking Investigation found little evidence of SME switching; only 4% of SMEs in the UK had previously switched banking current account (BCA). Whereas 70% of SMEs that had been in business for over ten years have been with their main bank for at least ten years.

However, in the last six months, 20% of the businesses polled have made changes to the financial products they are using, with 10% indicating they have switched current account. Moreover, 20% of those surveyed said they are strongly considering changing their business bank in the next six months.

Encouragingly, despite the economic downturn and continued uncertainty, many respondents remain optimistic about their prospects. One-third (31%) expect growth over the next 12 months, while 35% believe they will remain stable.

In fact, a much higher proportion of small businesses who were optimistic about their future business outlook had switched their banking current account than those who were pessimistic (15% vs 6%).

Small business borrowing

When asked what the biggest challenges they had faced and expected their business to face, many cited concerns about: cashflow being difficult to manage (19%), managing finances due to monthly changes in income (17%) and 1 in 10 were worried about applying for lending in case their application is declined.

The pandemic has significantly impacted the short-term cash flow and revenue of businesses, together with them increasingly having to cope with late payments from customers. While a significant proportion of small businesses have no debt, of the ones who had some form of lending in place, almost half (46%) have increased this debt by at least 50% over the last six months.

Just under two-thirds (63%) have made use of support measures ranging from Government-backed loan schemes (e.g. BBLs, CBILs), payment holidays, VAT deferrals or grants such as the Small Business Grant Fund. However, (18%) have taken advantage of alternative credit (not taken out from a high street bank). Open banking data is increasingly being used to offer credit as it allows lending providers to more accurately assess creditworthy borrowers and shape funding solutions specific to their needs. 3 out of 5 SMEs who had used alternative credit said it had helped them to be more resilient.

Commenting on the research findings, Constanza Castro Feijoo, Small Business Engagement spokesperson for the Open Banking Implementation Entity (OBIE), said: “It is encouraging to see the UK’s small business community recognising that open banking can help them to become more resilient, productive and profitable. From cloud accounting and sophisticated cashflow management platforms to reducing fees, businesses can improve their financial management and, therefore, their ability to cope with the change when cashflow becomes tight.

“As a standard and not for profit, the OBIE was set up to drive innovation and increased competition in financial services, the research appears to indicate that a wave of change is coming with traditionally loyal SMEs now shopping around to ensure that their current financial provider is giving them the best deal. Similarly, with many small businesses having to take on additional debt, open banking can assist with better borrowing by opening up a wealth of alternative credit as well as preferential lending rates.”

Interestingly, while the research points to many small businesses leveraging open banking, Ms Castro Feijoo said it is imperative for the financial services industry and Government to work together to address the barriers prohibiting others from trying it for themselves:

“The research identified that the main barriers to adoption stemmed from SMEs’ unfamiliarity with open banking and how it could help their business. Some SMEs said they were wary of ‘opening up’ their data to third parties. However, open banking is consent driven, it’s safe, secure and sharing your data just gives a fuller financial picture that opens more financial products rather than limits them. This no different than SMEs sharing their financial history with their accountant.”



 Notes to editors:

Data and spokespeople available upon request.

  1. According to the Federation of Small Businesses (FSB), there were 5.94 million small businesses (with 0 to 49 employees), 99.3% of the total business. SMEs account for 99.9% of the business population.
  2. For enquiries, please contact:, 020 7297 5965

About the study sample

Ipsos MORI conducted 500 online interviews among decision makers at SMEs with 2 to 49 employees, across the UK between 29 September and 8 October 2020. Quotas were set on the number of employees, and region to ensure a spread of interviews was achieved across the UK and across different size businesses.

About the Open Banking Implementation Entity:

The Open Banking Implementation Entity (OBIE) is the entity set up by the CMA in 2016 to deliver Open Banking. Its trading name is Open Banking Limited. OBIE is governed by the CMA and funded by the CMA9 (Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS Group and Santander). Its works with the CMA 9, as well as challenger banks, financial technology companies, third party providers and consumer groups.

OBIE’s role is to:

  • Enforce the obligations on the CMA9 under the CMA Order
  • Design the specifications for the Application Programme Interfaces (APIs) that banks and building societies use to securely provide Open Banking
  • Support regulated third party providers and banks and building societies to use the Open Banking standards
  • Create security and messaging standards
  • Manage the Open Banking Directory which allows regulated participants like banks, building societies and third-party providers to enrol in Open Banking
  • Produce guidelines for participants in the Open Banking ecosystem
  • Set out the process for managing disputes and complaints

 [1] According to the CMA’s 2016 Retail Banking Investigation