Most Canadian small-business owners are unaware of legislation that will introduce open banking to the country, while nearly one in five currently share online banking credentials with accountants, bookkeepers, employees or software providers, according to new research commissioned by Xero.
The survey by Angus Reid Group found 82 per cent of Canadian small-business owners had not heard of the Consumer-Driven Banking Act, while 61 per cent said they had never heard of open banking.
Only four per cent said they both knew the legislation existed and understood what it meant for their business.
The findings highlight the ways businesses currently move financial information and the potential changes open banking could bring to those practices.
Eighteen per cent of respondents said they currently share their online banking username and password with an accountant, bookkeeper, employee or software tool. Twenty-two per cent said they had done so at some point.
The research was released at Xerocon Denver on Aug. 19, where Ashalee Mohamed, country manager for Xero Canada, and Jules Hawkins, co-founder of Hawkins & Co Accounting and a Xero Accounting Ambassador, discussed the implications of the change for accountants, bookkeepers and their business clients. The panel was moderated by Sarah Bartnicka, founder and editor of Milk Bag.
Among the respondents, 49 per cent said they would trust their accountant or bookkeeper most to manage access to their financial data. Twenty per cent named their bank, while less than one per cent chose a fintech company.
The survey also found that businesses primarily see administrative benefits from open banking. Thirty-nine per cent said easier accounting and bookkeeping was among the benefits they wanted most, followed by less time spent on financial administration at 28 per cent and lower banking costs at 27 per cent.
Twenty-eight per cent of respondents said they are likely to use open banking services during the first 12 months they are available. Among business owners who were already aware of the Consumer-Driven Banking Act, that figure rose to about half.
“Open banking is arriving in Canada and the majority of small business owners don’t know it’s coming. This is a real gap to close, because a framework only delivers if the businesses it was built for are ready to use it,” said Mohamed. “ What’s striking, but not surprising, is that businesses already trust their accountants and bookkeepers with this more than their own banks. That’s exactly why advisors are best placed to close the awareness gap: owners who already knew about the Act are around twice as likely to say they will use these services in year one. My advice to practices is simple – now is a great time to get ahead of the change and move to the cloud if you’re not already there.”
The survey indicates that awareness of the legislation remains limited among Canadian small-business owners even as businesses continue to rely on existing methods to share financial information with third parties.
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