The Open Banking data sharing transformation is set to evolve into more wide-ranging changes to the financial services industry, including Open Finance and Open Data. SMEs want greater access to a more diverse set of financing options and some new firms are trying to harness novel data sources to provide it.
In this episode, we speak with Alex Cardona, co-founder of accounting data integrator Codat. Alex has had an interesting career working at a number of groundbreaking FinTech companies. Codat develops a universal API for integrating with small business financial data sources.
Codat does to accounting data, what open banking is doing to banking data. Normalising and standardising company accounting records across a wide range of Accountancy software providers, and making them available to third parties via a single API. While this might not have the same immediate glamour as a fancy new user interface or direct to customer proposition, this widening of the data pipes between financial services providers and the rest of the customers holds more promise of genuinely transformative services.
In our conversation, Alex discusses what winning £5 million funding from the Capability and Innovation fund will mean for SMEs and what Codat is working on now and the powerful potential for new services that arise with easy and instant access to live SME accounting data. And the way these may remedy the underserved nature of this customer segment. We also discuss the role of technology and the likely winners and losers in a reordering of how SMEs to access and use financial services.
Open Banking is great, but for small businesses it only covers a small portion of what’s needed. What will really change the game is Open Accounting. There’s a reason lenders to small businesses ask for both bank statements and management accounts – you need the accounts as well.