Liberis was the first alternative finance platform to process a small business funding application via Open Banking. Why is this important and what is the positive impact of this new financial tech on business growth?

Open Banking is a safe and secure way to give providers access to financial information quickly and efficiently, saving time and hassle for any applying businesses. Providers can access the necessary details through collaboration with open service developers and then use the data to decentralise decision making.

The technology is allowing consumers to benefit from the data that their banks are holding on them - but currently not using to provide finance.

Taking control of this information, UK small businesses can now better benefit from the funding options available to them, ultimately fast-tracking their development and moving to bridge the current UK funding deficit.

Data protection and security are top of the agenda for many businesses and by harnessing this technology at a time where data is more readily accessible, it’s an exciting period for the lending space and small businesses.

The use of Open Banking technology is a pivotal moment for SME funding and will fuel small business growth, ensure fairer credit decisions and is vital for the wider UK economy.

Harnessing Open Banking Technology

At Liberis, we were the first in the UK to process a small business funding application via Open Banking and have since seen the benefits to small businesses first-hand! Increased transparency, more efficient form-filling, fairer credit decisions and greater growth opportunities too.  And, these are just the tip of the iceberg.

We can use Open Banking technology with all our customers (provided they work with a compatible bank). At present, through our innovative Business Cash Advance, Liberis links repayments directly to cash flow so businesses only repay when their customers pay them. So far, every £1 of Liberis funding increases spending in the economy by over £1.50.

Understanding Open Banking Technology

Open Banking technology is, without a doubt, a huge milestone in the financial world. Faster application times and increased access to finance is exactly what UK small businesses require, however, when it comes to data sharing to achieve this there is, naturally, an element of initial uncertainty.

But, Liberis has found that its small businesses are comfortable sharing their data to receive something they value in return, in this case a Business Cash Advance.

Thinking broader, Open Banking has enabled smart service businesses - like Liberis - to work even more effectively when providing funding, products, or any tools required. It’s set to notably increase small business’ access to funding; as it can take the data the banks have - whom are often resistant to lend on - and bring it directly to providers that are dedicated to funding growth directly.

Accessing finance can be a huge challenge for UK small businesses. Especially as the mainstream banking system has so significantly retreated from funding small businesses in recent years; with the total amount of bank overdrafts and loans outstanding to small businesses decreasing by nearly £6 billion in the past five years.

Our recent research has shown nearly 30% of UK SMEs require funding simply to stay afloat, and the most common funding request comes in at around £30,000.

Limiting access to this funding can not only hinder small business growth, but negatively impact wider economic progress as a result too; so the funding gap is most certainly an area that needs to be rectified, with ease of application and smoother processing at the highest priority.

As leaders in the alternative finance space, we are keen to shine a spotlight to help drive additional support.

Jonny Hawkins is head of data science at Liberis.