How Open Banking will help businesses with money management

A major challenge experienced by both SMEs, MSMEs and large businesses is determining how best to manage their money gotten from sales or other operations.  

The reality is that many businesses leave money on the table by letting funds sit in their current accounts. Of course, the banks are more than happy for companies to do this since they do not pay interest on these funds. Consequently, businesses and financially educated individuals have developed a practice of pooling their funds from various accounts daily or weekly into interest-bearing accounts. In addition, treasury bills or bonds may be purchased in cases where there is no foreseeable short-term use for the cash.

However, for those who choose to, pooling funds daily is a tedious endeavour; often requiring much manual effort and switching between multiple corporate banking applications. As a result, companies often fail at this or abandon these efforts. 

With the advent of open banking initiatives, companies will be able to execute these processes automatically and with fewer touchpoints. The goal is to improve the ease with which finance managers are able to execute their daily tasks. This makes for a simpler and more efficient workflow; one which is less prone to human error.

Application of open banking for better corporate money management 

A number of fintechs, such as Ceviant Finance founded by Idris Alubankudi; are helping companies manage their treasuries and finances by allowing finance managers and CFOs to view their cash positions across all their banks in real-time. Through open banking technology, companies can get an accurate picture of their financial standing to inform their financial decisions.

With sophisticated algorithms created by the fintechs, companies would be able to set rules that allow excess funds from various bank accounts to be pooled into interest-bearing investment accounts. Additionally, these fintechs, using open banking, can move funds from these investment accounts into operational accounts just at the time funds are needed to make payments or settle liabilities.

Further digitization via open banking technology would make it possible for companies to initiate all necessary payments from within their financial management software. These include salaries, taxes, utilities, etc. Companies can integrate this function into their Enterprise Resource Planning (ERP) tool to streamline the process.

Benefits of Open Banking to businesses 

While ideas of seamless financial management described above have been around for a while, the lack of a common API standard has made implementation impossible; even for the smartest and most relentless fintechs. The capabilities that open banking offers would make these functionalities simple and easy to implement.

Open banking promotes ‘frictionless finance’ and creates new possibilities and efficiencies for all. Maarten van Rossum, Head of Global FIG sales at Barclays explains that this is particularly true in the corporate treasury sector. He describes the work of open banking as creating “an alternative conduit through which companies can undertake their primary cash management requirements, ranging from payment initiation to balance and transaction reporting and liquidity management, across their various corporate banking partners”. 

The application of open banking initiatives in corporate finance can yield the following benefits for companies:

Better-informed financial decisions 

With open banking, companies can view their entire cash positions across all corporate banking partners in real-time, all in one place. By knowing their true financial position, companies can make better informed financial decisions and ensure efficient utilization of their corporate resources. Better financial visibility and control over their business make it possible for finance managers and executives to be able to manage finances better; including eliminating weaknesses such as needless expenditure.

Access to financial data for SMEs

Before now, only the big companies had the resources to take advantage of technology solutions that offered such vast access to one’s financial data. However, with open banking, SMEs will not be left out. Smaller finance and treasury teams, with open banking APIs, could access multiple banking platforms and extract the necessary financial data, all at once. 

Improved creditors’ confidence 

Similarly, banks would also be able to access companies’ financial data from other banks. The enhanced visibility that comes with this access can help banks make better-informed credit decisions as they would have a more accurate picture of the credit risk.  An improvement in creditors’ confidence makes for stronger credit decisions and they may even offer more favourable terms based on the company’s financial information.

The benefits of open banking are not limited to corporate finance functions alone and even extend as far as improving customer interactions and experience with businesses. For further insights about open banking and how it can benefit companies, you can reach out to Open Banking Nigeria at [email protected]


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