We don’t want to sound over-dramatic, but Open Banking is revolutionising the way individuals and businesses manage their finances.
How?
Historically, managing finances and payments has been a challenge - especially for small businesses, and individuals that rely on multiple sources of income – that's where Open Banking comes in. It helps manage the multitude of problems that go with managing finances by offering faster payments (we’re talking ‘real-time’ payments), better security and more transparency.
We know... this all sounds great... but what exactly is Open Banking, and how can it benefit you?
What is Open Banking?
The story
For some time, the UK Government has been looking at the way in which established large banks and building societies could make it easier for new financial services providers to offer new products, services, and a better choice for customers. In 2018, following a market review by the Competition and Markets Authority (CMA), new Open Banking rules were introduced, meaning that the UK's largest banks were required to allow people to share their own financial data with authorised providers, granting the providers read-only access to things like the person’s spending transactions and regular payments.
The UK was one of the pioneers of this new wave of technology, which has since become available in different capacities across the globe.
The basics of Open Banking
To put this into context, this means that businesses and individuals (like yourselves) have more control over your financial data. You can securely share your data with authorised third-party providers like us, Payment Bear, or ask us to initiate payments on your behalf. In doing so, it opens a world of opportunities, from real-time payment processing to automated financial management.
Open Banking is regulated by the UK government to ensure security and protect users, so you never need to worry about how your information is used.
How does Open Banking work?
Open Banking in simple terms...
We won't get too technical with exactly how Open Banking works (that’s for our tech team to work out), but here’s a simplified explanation in the context of making a payment through Payment Bear:
- You can create a digital invoice in the Payment Bear app, offering Open Banking as an accepted form of payment and including your bank account details.
- When your customer goes to pay this invoice they will be presented with a list of banks that offer Open Banking as a service (in the UK this is pretty much all of them).
- Once your customer has selected their bank, they will be directed to their online banking login or mobile app (if they’re paying on their phone).
- In the background, we will tell the bank everything they need to know about the payment that’s about to be made (we call this ‘initiation’). Your customer doesn’t have to enter any information about the payment themselves.
- Once they have signed in (‘authentication’), they will be asked to confirm they are happy for the payment to be made (‘authorise’).
- Your customer’s bank will then make the payment directly into your bank account. It’s that simple!
How to find out more
For more information on Open Banking, we recommend visiting the Open Banking website.
The benefits of Open Banking for Individuals and Small Businesses
Big businesses just don’t quite have the same nuanced problems that a lot of individuals and small businesses face. Here's our take on the main benefits of Open Banking for this specific group:
1. Faster payments
- Open Banking ensures you get paid faster, reducing long waits for payments from clients and improving your cash flow.
- Freelancers, Contractors, Gig Workers and Small Businesses often deal with late payments, but with Payment Bear’s Open Banking integration, clients can pay instantly using secure bank transfers.
2. Saving money on payment fees
- Traditional payment methods often come with transaction fees. Open Banking can lower or even remove these fees by facilitating direct bank transfers.
- Payment Bear integrates Open Banking so freelancers and small businesses can save money on every transaction.
3. Better financial control
- Open Banking offers real-time insights into your cash flow, making financial planning easier. (We’ve written all about why this is important for businesses and individuals here).
- Payment Bear’s dashboard allows you to see all incoming and outgoing payments in one place, keeping you firmly in control and in the driver’s seat.
4. Automating mundane financial tasks
- With Open Banking, Payment Bear can automate things like repeat payments and reconciliation, reducing manual effort.
- Automation ensures you spend less time on financial admin and more time on what you do best - growing your business.
Why Open Banking is safe and secure
Your Data, Your Control
Did we mention that Open Banking is regulated by the government? Well now you know:
- Open Banking is heavily regulated to make sure that your data remains totally secure.
- You also remain in full control of who you share your data with. Only authorised, FCA-regulated third-party providers can access your information.
How Payment Bear Utilises Open Banking
At Payment Bear, we’re driven by a core set of beliefs that guide everything we do:
Innovation
Small businesses deserve better tech. That’s why we’re constantly developing tools that meet the real needs of small businesses, freelancers, contractors and gig economy workers.
Simplicity and Accessibility
Financial tools should be simple, not stressful. We make sure our platform is easy to use, free of jargon, and helps you get things done faster.
Efficiency and Automation
Automation saves time. Our platform streamlines invoicing with automated reminders and recurring schedules, so you can focus on your business.
Transparency and Trust
Clear communication builds trust. Our digital invoicing with automated reminders and Open Banking integration helps you maintain strong, transparent relationships with clients.
Empowerment through Technology
Financial tools should do more than manage admin - they should help businesses grow. Leveraging Open Banking, we empower you to get paid faster and improve cash flow.
Our commitment to all these things makes Open Banking a natural fit for Payment Bear.
Payment Bear + Open Banking: A winning combo for Freelancers and Small Businesses
- With Payment Bear, you can leverage Open Banking to get paid faster, manage your finances more efficiently, and automate manual tasks like invoicing.
- By combining Open Banking with our automated invoicing system, we’re helping individuals (freelancers, contractors, advisors, specialists, part-time workers, side hustlers etc) and small business owners stay on top of their financial management.
Takeaway
We’ve said it once, we’ll say it again. Open Banking is completely transforming the way businesses manage their payments and finances. Whether you’re a freelancer, small business owner, consultant or side-hustler, Open Banking provides the speed, transparency, and security you need to succeed.
We’re excited to harness the power of Open Banking to help you grow your business, get paid faster, and improve your cash flow.
Ready to experience the benefits of Open Banking? Sign up for Payment Bear and see how we can help you simplify your finances and get paid faster.
