Mastercard survey: Canadian small business owners optimistic about the potential of open banking, majority want it tailored to their needs

• Small business owners are already prolific users of digital financial tools and want better access to innovative fintech to take control of their finances.
• Diverse small business owners rely on digital tools and technology now and are most enthusiastic about open banking’s future potential.
• A secure platform that streamlines financial tasks and guards against fraud ranked as the most important feature for open banking.

Small business owners in Canada are increasingly adopting digital financial tools and technology into their day-to-day operations to drive growth, streamline processes, and improve security, according to new Mastercard research.

Having weathered the COVID-19 pandemic only to face inflation- and labour market-related challenges, diverse small business owners—in particular—say they are leveraging open banking platforms to improve business outcomes and overcome systemic barriers.

These findings form the backdrop to the Government of Canada’s upcoming open banking framework, which small business owners say should reflect their specific needs. According to the research, they want better access to digital tools and technology that are easy to use, are time-savers and are secure and trustworthy.

“Our latest research findings reinforce the message we keep hearing from small businesses across the country: They want better access to innovative, secure financial technology to take control of their finances, access new capital, and succeed,” said Darrell MacMullin, Senior Vice President, Products and Platforms at Mastercard Canada.

“Mastercard is committed to ensuring the data privacy of Canadians, and by empowering them to access and use that data, we can help accelerate greater innovation.”

Mastercard Canada surveyed 600 small business owners across Canada online in Q4 of 2022. Key findings include:

What: Open banking should be designed with small businesses in mind. Small business owners are generally favourable to the idea of open banking regulation, showing a preference for Government of Canada-approved platforms.  

• In general, small business owners feel positive (65%) about the concept of seamlessly sharing financial data between institutions and authorized third parties, indicating they’re ready to seize the opportunity for growth and streamlining offered by open banking.
• As major users of digital financial tools and technology (86%), 80% of small business owners say Canada’s open banking framework should take their unique needs into account.
• A further 70% of small business owners say they’re more inclined to use government-regulated tools/technologies in a hybrid open banking system, as opposed to unregulated platforms, signalling the importance of trust and transparency in the sector.

Who: Open banking helps level the playing field for diverse small business owners. The recent surge in small business owners using fintech is outpaced even further by those in underrepresented groups, as it can help eliminate biases in the system.

• Canadian small business owners are adopting new open banking technology rapidly—59% say they’ve used a new digital financial tool in the last two years—signalling that the open banking sector is primed for even further expansion under the upcoming national framework.
• People with disabilities (90%), Indigenous (79%) and women (71%) small business owners are even more likely to have used new open banking tools recently, underscoring the value open banking poses for underrepresented groups.
• In general, Canadian women (90%) use some form of digital financial tools or technology to manage their businesses at a higher rate than men (85%); access to even better open banking products and services will have an outsized benefit for women-owned businesses.
• LGBTQIA2S+ small business owners are much more likely to view digital financial tools and technology as key to improving their businesses’ financial health (46%) compared to all surveyed (27%), illustrating the value of increasing access to business loans and credit for underrepresented entrepreneurs and businesses owners.

Why: Open banking helps small business owners improve efficiency and security. Small business owners are more apt to use open banking tools that simplify and streamline their financial management while reducing fraud and other financial risks.

• When choosing a digital financial tool or technology to use, small business owners prefer platforms that require little training or experience (61%), as well as platforms that are time-savers (59%) and secure (56%).
• Small business owners rank fraud prevention (37%) and payment verification (37%) as the most appealing benefits of digital financial tools and technology, highlighting the increasing demand for secure, trustworthy open banking products and services.
• Open banking security increases in importance for small business owners over time—respondents with mature businesses were even more favourable toward fraud prevention (47%) and payment verification (53%) benefits than average.

Mastercard has global expertise in consumer protections, data privacy, global fraud identification and secure connectivity. The Strategy & Transformation Team provides business leaders with research, data, and analysis needed to inform strategic decisions related to open banking that will help generate better outcomes for the business and the end customer.