Open banking is closer to reaching the New Zealand public than ever before, with a pilot project currently underway and due to wrap up by the end of the year.

We know that it's a matter of when, not if, open banking hits our shores. Once Payments NZ is satisfied that all data being shared is secure, the country will take this massive step in the future of financial technology.

Once introduced, this technology will enable customers to digitally share their data from one organisation with another. In its most simple form, this means a customer will be able to use a third-party app to complete all their banking, despite using different banks for different services. In more advanced forms, it could mean banks predicting your needs and providing an overdraft or loan when cash flow gets tight.

In the small and medium business (SMB) realm, these new and innovative financial services will undoubtedly level the playing field.

Shape banking solutions to suit your business

One of the simplest characteristics of open banking is that it will be much easier to spread our needs across multiple banks. Those who embrace open banking can use a single app to seamlessly manage their accounts and credit cards from different banks. We'll be able to build a banking solution that fits us perfectly – whether that's a mortgage with one bank, a credit card with another, a transaction account with a third and savings with a fourth.

Sure, plenty of people may spread their banking across multiple providers currently, but with open banking it will be seamless – we'll be able to use our app to transfer funds easily between accounts regardless of which bank the account is with, and next business day processing will be a thing of the past. Other financial services such as insurance will also be accessible through this interface.

In the UK, where open banking was launched in January, banks have opened up their data to third parties. This forces them to shift from being one-stop shops for financial services to open platforms where consumers can start to embrace a more modular approach to banking.

In the small business world, this means business owners will be able to truly claim ownership of their accounts, lines of credit and loans. Open banking data will empower customers to compare products. It overturns the conventional wisdom that customer data was proprietary and a source of competitive advantage. In the future, it's plausible to see banks offering short-term loans before someone goes into overdraft because they know there's an important payment coming up.

Open banking will remove barriers to access financial services

When it comes to their finances, three things are constantly at the top of small business owners' minds: their cash flow; receiving and making payments; and access to additional funds or capital.

Consumer behaviours are quickly evolving, and small business owners' appetites are ripe for new financial solutions. Any technology that helps with the above three concerns, while giving them their time back and improving business productivity will be key.

Open banking means businesses will have greater access to financial services as and when they need them. Applying for credit will be easier and less time-consuming, especially if they are using cloud-based accounting software. The processes that are typically involved in applying for credit will be greatly reduced, or cut out completely. At the business' request, data could be packaged up and presented to various finance or trade credit providers, playing a valuable role in presenting financial services options for business owners to choose from.

Enhanced processes mean decisions about lending or other services can be made faster. Features like pre-filled loan applications with the company data sourced from platforms on behalf of the small business will become common. Financial institutions will be able to gain access to specific reports and invoices from the business which will help them make a faster and more accurate lending decision.

From the customer's perspective, having this access to tailored financial solutions can only be a good thing.

We perceive a point very soon where all small business customers understand they have access to, and control of, all of the information about their business. They can use their data to access financial services when they need them - making sure they have the right product at the right time.

The global payments industry is innovating and moving forward at an unprecedented rate. Access to this powerful data can only be positive for small and medium businesses. Once they learn to harness this power, perhaps taking cues from the UK and Australia, open banking has the potential to truly change the way businesses operate for the better.