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By John MacKinlay, Chief Executive Officer at CAARY

Next week I’m speaking on a panel of experts at the Open Banking Expo about the importance of open banking for small and medium-sized businesses. Here at CAARY we’re strong proponents of open banking because we are seeing firsthand how it benefits small and medium-sized enterprises.

Also known as consumer-directed finance, open banking is essentially about putting power back into the hands of consumers and small business owners. You know how you’ve always had to jump through hoops simply to share financial statements from your financial institution with third parties? With open banking, sharing your data becomes easy, straightforward and secure, letting you focus on choosing the products and services that best suit your needs.

That’s so important because small and medium-sized businesses struggle in the current financial structure. They do not fit between the existing goal posts. The assessment models used by traditional financial institutions make it hard for you to access the capital you need, when you need it. And there are a wide array of innovative companies – like CAARY – lined up with products and services that actually meet your needs. Open banking makes it possible for you to access them.

In progressive economies, including the UK, Australia, and the European Union, open banking is alive and well with a regulatory regime that supports it. Canada is a bit behind, but we’re thrilled to see the early signs that our Government will progress towards it. In the Liberal’s pledge for “A Fairer Financial System,” they promised an open banking model in 2023 that “…will ensure that you, not your bank, control your data.”

In the meantime, we are committed to making sure we start delivering the benefits of open banking to our clients as soon as possible. There are forward-thinking financial technology companies — like Flinks and Codat — that are simulating the open banking environment so consumers and small businesses owners can safely share their financial data in just a few clicks of your mouse, or taps on your phone.

When you share your data with us, you’re allowing us to get a truer picture of your business’s financial position. Instead of relying on credit history, which many small businesses don’t have, we look at cash flow and assets. This requires us to be more technically savvy than the average service provider out there. But it enables us to make credit accessible. And we’re just getting started.

The benefits of open banking extend beyond credit and lending. That data can also enable a wide variety of improved services for small businesses, including better accounting integrations, the ability to identify cost savings and discounts and better business intelligence. The list of use cases goes on and we have only just begun to explore the possibilities.

We will see the rich benefits for small businesses in full when an open banking regime is in place in this country. Undoubtedly, more products and services will emerge in Canada to support the small business sector. We will certainly be hard at work developing new and better ways to help you access credit, control spend, and more.

For more information or to sign up for a CAARY card, join our waitlist.

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