The democratization of data
Giving SMBs control of their data will help them to not only grow, but to thrive.
There are few things currently more valuable than data – in the business world, it’s the newest form of capital. Data hasn’t traditionally been controlled by consumers and businesses, however, the introduction of regulations like GDPR and PSD2 have helped to rectify that, with data now being given back into the hands of its owners. We call this new era the democratization of data.
What does the democratization of data mean?
The official definition of the democratization of data is “the ability for information in a digital format to be accessible to the average end user”. Codat’s definition isn’t much different. The average business now uses upwards of 100 software apps, and each platform – from their accounting software to their online payment system – provides a unique yet siloed view of their financial health just waiting to be unlocked. To us, it seems only fair that businesses of all sectors and sizes should be given the opportunity to harness their data for their own benefit.
How can data empower SMBs?
By utilising as much of their data as possible, SMBs can lower the barrier to entry for financial products and services, no longer having to spend hours compiling documents and reconciling accounts by hand.
By automating tasks like bookkeeping, inventory, and reconciliation, small businesses are therefore eliminating time-consuming tasks and manual data entry errors instantly. They can also access more niche products and services, like flexible insurance for seasonal businesses, for example. Most importantly, they’ll benefit from clear insights into their performance with crucial tools like accurate cash flow management, which will help them navigate their current financial position and prepare for whatever the future holds.
We understand the importance of taking care of small businesses – and not just because it’s the right thing to do. Small and medium sized businesses benefit the economy as a whole. Generating more than half of the country’s turnover, our 5.9 million SMBs (those with fewer than 250 employees) comprise 99.9% of all companies in the UK. When they do well, we all do well.
What kind of data can be utilised?
At Codat, we believe all business data holds real value. Our accounting integrations offer the ability to access highly contextual and rich data such as invoices, bills, financial statements, and much more. All of this data can provide insight into an SMB’s profitability. It can even be used to identify key fraud and risk indicators, such as abnormal invoice activity and increasing credit pressure.
Banking data, direct from source, can be used to corroborate the financials of a business as this data is immutable. Our new Insights product range, for example, enables financial service providers to verify the integrity of their business customers’ bookkeeping by cross-referencing their bank and accounting data.
Commerce data is also a highly valuable source of unique information that can be used to provide actionable insights into a business’s order history, income, inventory, and more.
The amalgamation of these data sources offers a multidimensional, contextual, and trustworthy view of a business’s performance that far exceeds the information available from credit bureaus.
There is a vast treasure trove of data out there waiting to help SMBs reach their full potential. And as data-driven organisations are growing at an average of more than 30% annually, financial service providers who act now to harness the endless possibilities of data will come out on top in the next generation of financial technology.