In the early 2000s, small businesses began flocking to the internet to streamline their operations, connecting with customers and suppliers in ways they had never been able to before. Compared to other sectors, however, banking took a bit longer to catch up to the changing times.Fast forward to today, and open banking could become the next breakthrough for businesses, offering a new layer of flexibility and integration in their financial operations. By allowing businesses to securely share banking data with third-party providers via APIs, open banking can unlock new opportunities for business owners, from better cash flow management to more accessible financing options.For community financial institutions (CFIs), understanding the potential of open banking and its impact on business clients is key to staying competitive. Open banking isn't just for consumers — it’s transforming how businesses manage their financial data, collaborate with service providers, and access a wider range of financial products and services.What Is Open Banking for Businesses?Open banking enables businesses — whether small enterprises or nonprofits — to securely share their banking data with third-party providers through plug-and-play application programming interfaces (APIs). These digital boulevards allow more businesses to integrate financial services into their operations more seamlessly (such as by accessing real-time cash flow insights, applying for loans, or managing payroll), all from one platform. The result? Greater flexibility, enhanced efficiency, and more tailored financial services.The rise of open banking is not just about access to data. It’s about giving businesses greater control over how and when that data is shared. As popular solutions like Plaid and Loquat have clearly demonstrated, connecting financial platforms via secure APIs can help businesses and consumers link accounts across multiple platforms, enhancing digital experiences and streamlining financial management.Opportunities for CFIs To Serve Business ClientsAs open banking transforms the financial landscape, CFIs have the opportunity to capitalize by offering more personalized and convenient services. By securely connecting with third-party providers and leveraging real-time data, CFIs can meet the evolving needs of small businesses and nonprofits. Here are some of the key opportunities:
- Streamline financial services for businesses. Open banking gives CFIs the flexibility to offer business clients more personalized services. For example, CFIs can provide real-time insights into cash flow, offer customized lines of credit based on up-to-date financial data, or create tools that automate invoicing and payments. This enhances the efficiency of everyday operations, providing companies with a clearer picture of their financial health. Just as Loquat and Plaid partner to improve the digital experience, CFIs could also consider integrating similar turnkey solutions into their offerings to help clients more easily manage funds and open accounts.
- Optimize cash flow management. For small businesses and nonprofits, managing cash flow is a constant challenge. Open banking provides access to real-time financial data. Businesses can track their spending, monitor accounts payable and receivable, and forecast future cash flow needs more accurately. By integrating these broad capabilities, CFIs can offer value-added services, such as automated budgeting tools or more flexible loan terms, based on up-to-the-minute, 24/7 business data.
- Reduce reliance on third-party providers. Traditionally, businesses have relied on third-party aggregators to consolidate their financial data. Open banking means CFIs can step in to serve as the primary data aggregator for business clients. Ensuring client data is secure and easily accessible is a huge value add that quickly builds trust. This strengthens client relationships while giving CFIs a competitive advantage over other financial service providers.
- Improve access to capital. Open banking can provide any business with a more transparent view of holistic financial health, which can simplify (and speed up) the loan application process. With access to real-time financial data, CFIs can provide faster and more tailored lending solutions, like short-term loans or lines of credit that are more aligned with a client’s current needs and performance. This can be a game-changer for businesses that need fast, flexible access to capital. The shift to open banking can also streamline the loan approval process. CFIs can evaluate creditworthiness much faster with aggregated insights from a range of external sources.
- Facilitate nonprofit needs. Nonprofits, in particular, face unique financial challenges, like fluctuating donation revenues and always-tight budgets. Open banking can help nonprofits integrate donation platforms, monitor fund disbursements, and track revenue streams in real time. With this degree of visibility, CFIs can offer nonprofit clients solutions tailored to their specific cash flow cycles, including customized lending products or tailored savings accounts.
Navigating the Regulatory LandscapeAs businesses and nonprofits embrace open banking, CFIs must navigate the regulatory environment surrounding the use of business data. The Consumer Financial Protection Bureau’s (CFPB) Personal Financial Data Rights Rule is one such regulation that grants customers control over the personal data they share.CFIs with more than $850MM in assets will be required to comply with the CFPB’s open banking rule on a phased schedule, with the earliest deadlines beginning in 2026 for the largest institutions and extending to 2030 for smaller eligible institutions. Institutions with $850MM or less in assets are exempt from these requirements. This means CFIs should start preparing for the infrastructure needed to comply with these new standards (e.g., by implementing secure, transparent data-sharing interfaces).Update: CFPB Opens Comment Period on Open Banking Fees and AccessAs of August 21, 2025, the Consumer Financial Protection Bureau has reopened the rulemaking process for open banking, calling for public input on who can access business clients’ data, whether (and how) financial institutions and data holders could charge fees for API-based data sharing, and additional data security/privacy concerns. This marks a significant shift, as the agency considers modifications to regulations that were previously finalized but remain hotly contested. CFIs and other stakeholders now have a 60-day window to submit feedback on how open banking rules should balance innovation, security, and fair cost structures. This also means the regulatory landscape is very much in flux, and CFIs should anticipate further updates as new rules are finalized.Even as specifics remain uncertain, CFIs can make meaningful progress toward compliance by considering the following:
- Invest in secure consent management systems. Business clients need to feel confident that they can control who has access to their financial data. CFIs should invest in robust consent management tools that empower businesses to control what data of theirs is shared and with whom. This builds trust and ensures clients are compliant with data protection laws. As highlighted by the ABA, open banking regulations help businesses maintain control over their data — and CFIs must be prepared to facilitate these secure consent protocols.
- Stay ahead of compliance deadlines. With evolving regulations in the open banking space, CFIs need to stay informed of regulatory updates to remain compliant. Ensuring all data sharing interfaces and dashboards meet the necessary security and privacy standards is critical to avoiding fines and reputational damage. The CFPB's rule requires all financial providers to offer secure digital interfaces for data sharing without charging fees. This means CFIs must prepare to invest in secure, compliant interfaces well ahead of deadlines.
- Enhance data security protocols. Given the sensitivity of financial data, CFIs should strongly consider adopting stringent cybersecurity measures to protect business client data. Implementing secure authentication, encryption, and conducting regular audits of data-sharing processes will help prevent data breaches and maintain trust with business customers. The ABA recommends establishing robust security protocols to safeguard data sharing.
- Develop data aggregation capabilities. As Plaid and Loquat have shown the market (including banking customers), integrating open banking into business solutions can eliminate the need for third-party aggregators. CFIs should explore ways to aggregate business financial data themselves, offering more comprehensive services and positioning themselves as trusted data stewards, thereby improving client experiences.
- Prepare for more customer mobility. Open banking makes switching between providers easier than ever. With access to financial data and services, businesses are more likely to switch financial institutions if they feel another provider offers better value. CFIs should leverage business data and spending insights to proactively create more personalized products based on the real-time needs of banking customers.
Prepare for the Future of Open BankingOpen banking presents real opportunities for local banks, lenders, and credit unions to better serve business clients, enhance cash flow management, and offer tailored financial products and services. As open banking continues to evolve, CFIs have the opportunity to transform outdated service offerings, strengthening long-term relationships while attracting a new generation of business clients. CFIs that invest in more secure data sharing tools can not only stay ahead of regulatory requirements but also build the data aggregation capabilities needed to compete in the business banking landscape of tomorrow. By leveraging real-time data, providing more nuanced and bespoke financial products, and ensuring proactive regulatory compliance, CFIs can stay competitive in the rapidly changing financial services landscape.
