Open Banking: unlock the opportunities for you and your practice
If you find yourself spending hours chasing your clients for their banking data, you're not alone. This has long been a frustrating and painstaking process for accountants and a costly time drain for practices.
In recent years accounting software has offered a solution by providing bank feeds - usually administered by a third party service - to import clients' transactions into their online accounts. The great news is that the Open Banking directive, set to come into effect in January 2018, will make it even quicker and easier for you to gain real-time access to your clients' banking data through cloud accounting software.
An introduction to Open Banking
Open Banking is part of a wave of digitally disruptive legislation that seeks to modernise outdated systems and move the banking and accounting industries into the digital era. Imposed by the Competition and Markets Authority (CMA), the Open Banking directive is concerned with opening up competition between banks and making customers’ banking information more accessible to appropriate third parties.
When it is introduced in January 2018, the following major banks will participate in the Open Banking directive:
- Royal Bank of Scotland
- Allied Irish Bank
- Bank of Ireland
- Lloyds Banking Group
The impact on clients
If clients give their consent to make their data available, there are a vast number of ways in which they could benefit. Paying for items online could become far quicker and easier if clients give online retailers access to their banking data, for example, as the additional step of submitting card details to a third-party service for processing would be removed. Clients will be able to decide which companies have access to their banking data and how long for, as well as what the companies can do with that data. They should be reassured that their data will be encrypted and that only companies regulated by the FCA or other “competent authorities” will be able to use it.
The opportunity for accountants
Put simply, if your clients are customers of any of the participating banks and you partner with an approved accounting software provider, Open Banking could give you real-time access to your clients’ most up-to-date banking data every single day. This will free you up to focus on providing value-added services to your clients while they go about their daily business, knowing that their transactions are being pulled through to you accurately - and automatically - through their accounting software.
How FreeAgent can help
Once it becomes available, a number of cloud accounting software providers - including FreeAgent - will have the FCA registration required to use the Open Banking API. However, if any of your clients bank with either the Royal Bank of Scotland or NatWest, FreeAgent is uniquely placed to help you, your clients and your practice get the very most from the enormous opportunity that Open Banking presents right now.
At the start of 2017, FreeAgent was selected from a longlist of 30 vendors to partner with Natwest and Royal Bank of Scotland to offer its business banking customers access to its award-winning online accounting software. Clients who sign up to FreeAgent through the Natwest and Royal Bank of Scotland partnership and agree to share their data will make their FreeAgent account data accessible to their bank, allowing Natwest and Royal Bank of Scotland to tailor the services they offer your clients accordingly.
The partnership means that working with FreeAgent will allow you to offer clients an unprecedented level of integration between their banking service and accounting software. As technology and legislation continue to move forward to bring both industries into the digital era, this is the kind of solution that clients will soon come to not only expect, but demand, from their accountants.
To find out more about FreeAgent, visit our website or call 0800 025 3900.
About the author
Kevin McCalKevin McCallum is Chief Commercial Officer at FreeAgent. Having started his working life in business banking with Bank of Scotland, Kevin moved into the accounting software industry more than 16 years ago to work at Pegasus, one of the longest-established software vendors in the UK. He joined the executive team at FreeAgent in 2010, and is responsible for key partner channels with a particular focus on banks and accountancy practices.lum is Chief Commercial Officer at FreeAgent.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the commercial partner and not necessarily those of ICAS.