How B2B sellers can embrace Open Banking to boost sales


“Open Banking is an opportunity for more innovative players to make use of customer data and keep the doors open for SMEs.” – Nicolas Rabinovitch, Director of Data Science & Fraud at Hokodo

When Open Banking was first introduced in the UK in 2018, much of the focus was on the business-to-consumer (B2C) market and how sharing banking data with third parties would increase competition and improve financial services for customers. Since then, however, there has been a growing recognition of the opportunities for Open Banking in the business-to-business (B2B) world, particularly for small and medium-sized businesses (SMEs) who have traditionally been underserved by the financial industry. In a recent webinar, Hokodo’s VP of Marketing Lucy Heavens was joined by Oscar Wilsby, Co-founder and Head of Data Science at Fuse, and Hokodo’s Director of Data Science and Fraud Nicolas Rabinovitch, to discuss this shifting landscape and the potential for the market to grow.

Let’s jump into our five key learnings from the webinar.

Improving SME finance and payments

In times of economic uncertainty, small and medium-sized businesses (SMEs) can often find it harder to access credit as banks tighten their lending criteria. According to the European Central Bank, the SME loan rejection rate among Euro-area banks increased by 3 percentage points in the final quarter of last year. One reason SMEs find it tougher to get loans in such circumstances is because there is very little public data available for banks to make confident risk decisions, says Nicolas. “This is why Open Banking is an opportunity for more innovative players to make use of customer data and keep the doors open for SMEs,” he says. Open Banking means more up-to-date, accurate and relevant information for lenders, so they can make more informed credit decisions. Open banking can also be used for initiating payments, making it a much faster way to pay suppliers, Nicolas adds.

Enhancing the transaction experience 

Open banking can improve the B2B buyer experience when paying for goods on credit. Buyers can share their banking details at the checkout without needing to send months of bank statements or other paperwork to the credit provider for approval. “It’s a much slicker experience for the buyer and also helps the seller operate more efficiently,” says Nicolas. This also helps sellers reduce their fraud risk because they are not having to rely on paper forms that could easily be forged, he says.

In addition, Open Banking data enables lenders to automate risk assessments. “Even if you had access to someone’s bank account, trawling through all of the transactions and manually inspecting that account is still quite a bit of work,” says Oscar. With Fuse’s transaction categorisation, lenders can set rejection policies that are triggered if certain criteria are not met, he says.

How sellers can start using Open Banking

There are two ways that merchants and sellers can integrate Open Banking into their sales process. First is to provide it as part of the checkout experience, where a buyer would be asked to log into their bank account and provide consents for what data is going to be shared and for how long. “That can be a very slick process as part of an online customer journey,” says Nicolas. A second approach is to do it outside of the checkout journey, often because business bank accounts are more cumbersome to use or the person making the purchase may not have access to the account details. In those situations, the seller would contact the buyer by email to ask for an Open Banking connection, says Nicolas.

Accelerating adoption of Open Banking in B2B

“It is a very safe way of sharing your data. You’re not giving access to your bank accounts, you are merely allowing a third party a view of that data.” – Oscar Wilsby, Co-founder and Head of Data Science at Fuse

While some SMEs are already embracing Open Banking, more can be done to encourage further adoption. First, there needs to be more education about how Open Banking works and greater reassurance around data security. “It is a very safe way of sharing your data. You’re not giving access to your bank accounts, you are merely allowing a third party a view of that data, and that view can be revoked at any instance that you wish,” says Oscar. Likewise, Open Banking payments can’t be initiated without the user’s consent, he adds.

Another way to accelerate adoption is by showing businesses the value of sharing their data. “The reason you share your data is because you want something out of it,” he says. That could include raising credit limits or accessing credit where previously it may have been declined.

Evolving regulations will boost Open Banking innovation

While the European Union’s second Payments Services Directive (PSD2) framework made Open Banking possible, the next iteration of the regulation – PSD3 – will likely strengthen it further and increase innovation. “What this will mean is that, at checkout, there’ll be less pain, quicker authentication journeys and direct access to payment systems for fintechs,” says Oscar. Transactions will also be more secure because detailed identification data will be embedded in any payments. “This information will allow you to reconcile whether this is in fact the person or entity you’re dealing with and that ultimately allows companies like Fuse to build systems that help prevent fraud or flag fraud risk,” says Oscar. 

The opportunities for Open Banking to be transformative in the B2B world are vast. By offering Open Banking options to buyers, sellers can make the payments process slicker or increase the likelihood of credit being approved, while also enabling third-party providers to innovate and build products that can improve how the overall financial ecosystem functions.

Watch the webinar in full below.