How SMEs are benefitting from open banking

Open banking has revolutionised the way businesses access loans – and, crucially, the speed at which they are approved for credit

Existing processes for SMEs to obtain loans can take days and involve cumbersome manual processes that are not always fair to the applicant and can be susceptible to fraud.

But a new range of services are opening the doors for SMEs to obtain access to loans and credit in a much shorter time frame – in some cases minutes rather than days – and with more reliable and accurate data.

This is thanks to open banking. Launched in 2018, this legislation requires banks, with strict rules around security and customer consent, to grant third parties access to their customer’s bank account data.

This has unleashed a new wave of innovation in the SME lending space. For example, open banking technology provider Yolt recently launched a plug-and-play tool called Cashflow Analyser. Built on its open banking connections, it enables lenders, leasing companies and credit-checking services to access the bank accounts of credit applicants, gleaning insights into their cash flow to speed up credit checks.

For example, with Cashflow Analyser, a credit-check specialist can gain better data on credit applicants and deliver an instant verdict. Or a car leasing company can work out if a business looking to lease vehicles is in a good position to service the account and pay on time.

With Cashflow Analyser, SME lenders can drastically speed up the lending process

“This is a game changer in the way we provide insights into the SME’s business,” says Nicolas Weng Kan, CEO of Yolt. “Until now, credit checks have been a time-consuming, paper-based process that required applicants to send in reams of account information for analysis. Cashflow Analyser uses open banking transparency to automate the process. In fact, we calculate that our technology can reduce processing times on borrowing applications by 85%, and saving lenders up to 18,000 hours per year.”

Cashflow Analyser can be a valuable tool for a range of businesses that lend or lease to SMEs. Furthermore, Yolt is offering Cashflow Analyser as a white label product to other companies, and the company believes the technology could be a turning point both for credit providers and for SMEs who need to access loans quickly.

One such company is multinational business information giant Creditsafe, which is embedding Cashflow Analyser into its credit process. Creditsafe provides business intelligence information and has offices in 13 countries globally. Using Cashflow Analyser, Creditsafe analysts will have access to cash flow data about credit applicants, improving transparency and speeding up the process.

“The partnership with Creditsafe enables them to add a valuable, reliable and accurate data source to their credit-decisioning processes,” added Weng Kan. “And we are looking forward to helping more businesses in the UK and across Europe to make better lending, credit and leasing decisions.”

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