In recent years, open banking has revolutionised consumer payments, enabling faster, more secure, lower cost, and highly-integrated payment experiences. Consumers take for granted services like Pay by Bank which allows instant, card-free payments directly from their bank accounts. The same transformation is poised to redefine B2B payments, particularly for Accounts Payable (AP) teams, who will be able to directly integrate with banks and payment platforms. The need for innovation in AP is clear: teams face mounting pressure to make faster, more accurate, and secure payments – a demand that traditional systems often struggle to meet.
These challenges are not new, but the stakes are higher than ever. Businesses operating in an increasingly competitive and interconnected global market cannot afford inefficiencies in their payment systems. The solution lies in adopting open banking to address these systemic issues.
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The open banking revolution
At its core, open banking enables secure, API-based access to financial data and services. It allows users to securely share their financial data with authorised third parties, enabling services like budgeting apps, personalised financial insights, and instant loan approvals. For consumers, open banking has created a unified and highly efficient ecosystem for managing money.
For AP teams, this means direct integration with banks and payment platforms, automating many of the traditionally manual tasks that bog down efficiency. This capability serves as the foundation for addressing three overarching themes: process efficiency, security, and strategic insight.
Enabling faster payments
Cash flow is king for companies, but still late payments remain a persistent issue. This often stems from inefficiencies in approval workflows or disputes over invoice accuracy. If an AP team makes a payment late, this can have serious consequences on the company’s ability to invest funds it assumed it had available for paying bills, investment or other purposes. This leaves business leaders caught short, as financial forecasts might have to suddenly change. Repeated late payments also risk damaging relationships with suppliers, who may prefer to work with more reliable customers.
To help address these problems, open banking facilitates real-time payment initiation and approvals. With immediate access to financial data, invoices can be matched automatically with payment records, reducing discrepancies and disputes. This capability not only accelerates the payment cycle but also strengthens supplier relationships by ensuring timely and accurate payments. A streamlined payment process fosters goodwill and reliability, which are crucial in competitive markets.
Streamlining processes to enhance efficiency
One of the most significant pain points in traditional AP workflows is inefficiency caused by manual processes. From data entry to invoice reconciliation, these tasks are labour-intensive and prone to error. Research found that, nearly 4% of manually processed invoices contain at least one mistake, and with AP teams spending more than half of their time (55%) manually keying invoices, the margin for error is huge. These errors only increase the chances of late payments and frustrated suppliers, who are forced to wait as AP teams jump through manual hoops to process invoices.
Open banking resolves this by enabling seamless integration between banks, payment platforms, and enterprise systems. Real-time access to transaction data ensures that payment and invoice information is accurate and up to date. For instance, payment details can be pulled directly from bank accounts, reducing the reliance on manual input and expediting the reconciliation process. By eliminating these bottlenecks, AP teams can redirect their focus to more strategic activities.
Boosting security and minimising risk
Invoice fraud is an ongoing challenge for AP teams, particularly in systems reliant on email-based authorisations and manual data exchanges. Payment processes can be multilayered and complex. And with organisations often only having small finance teams, fraudulent activity can often go undetected. Invoice fraud has serious financial implications. Research found that invoice fraud cost UK business nearly 1.2 billion annually, and it’s only getting worse. Invoice fraud also causes irreversible damage to the reputation of a company, as suppliers opt for businesses they consider more trustworthy.
Open banking offers a secure alternative through API-based connectivity. Payments are authenticated directly with banks, reducing the risk of fraudulent activity. Additionally, real-time transaction monitoring provides AP teams with immediate visibility into unusual patterns, allowing them to act swiftly to mitigate threats. This layered approach to security not only protects organisations, but also builds trust with suppliers and stakeholders.
Transforming AP into a strategic function
Beyond addressing operational challenges, open banking positions AP teams as strategic advisors to the rest of the organisation and management team. With access to real-time financial data teams gain insights into payment trends, cash flow forecasts, and supplier behaviours. These insights enable data-driven decision-making, such as optimising payment terms to gain flexibility into when invoices need to be paid, or identifying opportunities for early payment discounts. When combined with AI-driven predictive analytics, open banking empowers AP teams to move beyond transactional tasks and play a pivotal role in shaping financial strategy.
Embracing open banking to stay competitive
The shift towards open banking is no longer a question of if but when. AP teams that fail to embrace this transformation risk being left behind by competitors who take advantage of faster, more accurate, and secure payment processes. The cost of inaction is clear: continued inefficiencies, higher exposure to fraud, and diminished competitiveness in an increasingly fast-paced market.
Business leaders must act now to prioritise open banking initiatives. By investing in the necessary technology and training, organisations can future-proof their AP functions, ensuring they are well-equipped to handle the demands of a rapidly evolving financial landscape. Those who seize the opportunities offered by open banking will be best positioned for long-term success.
Joey Glazer is Director of AP Automations at Quadient
