How Open Banking helps franchises win new customers, enhance operations and manage finances

Open Banking is seen as a way for a fast-growing business to access alternative credit streams.

Open Banking, otherwise known as the Consumer Data Right (CDR), is continually permeating into new industries and unlocking fresh use cases. CDR is best described as a system that provides third-party access to user-permissions data through the use of application programming interfaces (APIs). 

To date, it has mainly influenced the finance and energy sectors. This is because CDR – as is the case with any emerging system or technology – is being gradually rolled out. It officially launched in the banking sector in Australia in July 2020 and has since rolled out in energy, with telecommunications, superannuation and insurance next on the list. 

One area that we see Open Banking gaining traction in is small businesses and franchises, either directly or via CDR-enabled products and services, such as FinTechs. Open banking can unlock incredible opportunities. This includes quicker, more transparent and tailored access to business loans; faster onboarding of customers; the ability to expand to new markets; and improved customer experiences through richer data insights. 

Accessing capital during fast growth

From a financing perspective, open banking can allow fast-growing businesses to better and more simply access alternative credit streams. For example, acquiring a business loan has traditionally been a cumbersome process, with business owners having to manually sift through and provide relevant financial documentation and data. 

Open banking, however, allows businesses to give an instant, real-time view of their current financial standing – fast-tracking the process, making it more accurate, and removing the need for archaic, paper-based processes. It can also lower the risk, as you’re more likely to only be granted access to capital that you’re in a financial position to pay back.  

Global insights at instant reach

Global open banking and data aggregation services have the unique ability to help businesses understand customers in new markets, in different regulatory environments, making expansion much simpler, more informed and less daunting. 

Many franchises and QSRs have global remits and ambitions – and understanding your customers at scale, across borders can be highly valuable. It can help you understand where consistency in your operations and customer experience is needed across markets, but equally, the nuances required for different demands, trends and jurisdictions. 

Furthermore, Open Banking enables businesses to truly understand the spending habits and behaviours of customers in any market. The result is that you can make immediate, informed decisions to drive revenue. This could be crafting tailored offers; providing contextual information to customers; making strategic decisions on product innovations and product offers; and being more deliberate with your marketing efforts. 

Real-time decisions and streamlining supplier payments

QSRs and franchises often have a plethora of suppliers, and the process of manually tracking supplier payments can be cumbersome, time-consuming and prone to error. 

CDR can provide franchisees with a single view of their supplier ecosystem, meaning you know exactly where revenue is being spent, removing the need to manually upload bank statements for each supplier. 

This real-time view of business finances and cash flow can help you stay on top of your balance sheets, which is particularly important as your business grows and your finances and supplier ecosystem become deeper and more complex. 

Onboarding new customers 

In addition to providing richer insights to businesses, CDR gives consumers access to a whole new world of information and opportunities, including a more transparent view of service and price comparisons. This creates a healthy level of competition and could fuel a greater velocity of customers switching to and from businesses.

And, as customers switch to new providers, CDR can speed up customer onboarding with features like instant verification and linking bank accounts. This helps to remove friction, saving customers from having to manually input personal information and can help improve conversion as a result. 

The best is yet to come

The Open Banking ecosystem, when compared to other technologies, is in its relative infancy – but its potential benefits and industries it can impact are endless. 

New use cases are being unearthed by the day, and some of the key beneficiaries over the next few years are likely to be fast-growing small businesses and franchises who want to grow into new markets and be more informed, consistent and data-led in the decisions they make. 

The world of Open Banking is only just getting started.