How open banking will remove traditional barriers for small-business owners

Like many of the “buzzy” innovations that came before it, it’s hard to comprehend the impact open banking will have in its current, early iteration.

Darrell MacMullin, senior vice-president of product and platform for Mastercard Canada, likens it to the hype around cloud computing, mobile technology and artificial intelligence before they became more commonly known to everyday Canadians.

“Cloud only became interesting when streaming services could start doing streaming, and suddenly people could see the power of it,” he explains. “The same thing is happening with open banking. We’re talking about the infrastructure right now, but it’s the applications and the benefits that are most interesting.”

According to a recent survey of 600 Canadian small-business owners conducted by Mastercard Canada, the country’s entrepreneurs are eager to embrace those innovations. It found that 59 per cent have used new digital financial tools in the past two years, and those numbers have increased significantly among people with disabilities, Indigenous and women small-business owners.

“Open banking allows small businesses to share their financial data to help owners demonstrate their creditworthiness more quickly and holistically than the traditional application process, while helping to eliminate bias in the financial system and reducing administrative burdens,” MacMullin says. “Removing barriers for these small-business owners has the potential to unlock a new wave of innovation and investment in the Canadian economy.”

MacMullin explains that cash flow and time management are the two biggest priorities for the average entrepreneur. He says open banking has the potential to give them more of both, along with the potential for added security and better customer and supplier relationship management capabilities. For example, open banking solutions can quickly approve restaurant owners for small, short-term loans so they can stock up quickly for a long weekend.

“When they look at digital financial tools, small-business owners typically prefer one that requires little training or experience, saves them time, and has security in mind,” he says. “That’s where open banking can be critical.”

MacMullin added that open banking solutions can leverage Mastercard’s strength in secure connectivity and transaction management.

“I see Mastercard as being a secure bridge, helping consumers, merchants and banks to transact better in a digital world.”

Advertising feature produced by Globe Content Studio with Mastercard. The Globe’s editorial department was not involved.