SME finance platform Swoop has integrated with Open Banking for the first time, giving its small business customers the ability to compare and switch current accounts and make cost savings on everyday spending.
The Swoop platform, a re-brand of BizFly, launched in May last year to connects businesses in need of finance with over 400 lenders including peer-to-peer platforms such as Funding Circle and Growth Street.
Last summer it became one of 12 finalists in the Open Banking Challenge, a competition funded by the main UK banks to encourage innovation using Open Banking API. The group won £100,000 which it used to develop its business current account comparison and switching feature.
It says its SME users can now integrate their business bank accounts into its platform and compare accounts from the big UK banks, high street banks and challenger banks.
Users can sync accounting software like Xero, and information on their business held by Companies House and DueDil to match them to the right funding and the right bank account for their needs, and then Swoop can switch them using the Current Account Switching Service.
Open Banking launched in January 2018 to allow customers to give their bank permission to share their data with other businesses, apps and online services, making it easier for them to compare products and switch to get better deals and more personalised products.
The nine largest banks have now made their APIs (application programming interfaces) live and Swoop uses that data to give business owners more choice for their banking and funding decisions, it says.
Swoop co-founder Ciaran Burke explained some of the benefits of Open Banking for small businesses using its platform. When customers consent to share their data, they can speed up the funding application and approvals process. Swoop had received feedback form SMEs that the process of gathering paperwork such as identification and bank statements to apply for funding was slow, but he said plugging into Open Banking makes it much more efficient.
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Open Banking can also bring significant cost savings, by analysing itemised spending on business bank statements – flagging overspending on anything from mobile phone, broadband and utility bills to bank charges, ATM fees and foreign currency exchange rates.
“When business plug in their data to Open Banking we can see what they are spending and what they should be spending – a lot of businesses use the big banks for foreign exchange and get crucified on the rate,” he told Peer2Peer Finance News. “We have found companies can be spending £5,000, £6,000 or £7,000 a year on banking fees for foreign currency when they could be using something like TransferWise to save money. Overdrafts are also really important to SMEs and this way you can see if the facilities would be better with another bank.”
Integrating also shows small businesses what loan facilities are available to them if they want them, he added.
“Not every SME can take on funding, but they may want to make their business more cost efficient,” he said.
But how many small firms are agreeing to share their data through Open Banking – are security fears proving an obstacle? Burke said a quarter of the platform’s 3,000 users has so far chosen to use the Open Banking facilities.
“What has been nice and surprising for us is that one in every four is integrating, it is a lot higher than we thought,” said Burke. “It was really important for us to build in that core savings data, it has been a big draw for people. We didn’t expect the uptake to be as good as it was.”
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