Open banking has already kicked off some big changes in the financial sector, and there’s much more to come.
For accountants, it’s an exciting opportunity to enhance your service and offer more to clients – but if you’re going to make the most of it, you need to get on board with online accounting technology now.
For anyone unfamiliar with the topic, open banking is a practice that allows bank customers to give third-party fintech providers access to their financial information, using the bank’s application programming interface (API).
It’s been made compulsory for all UK-regulated banks to share information this way, under rules enforced by the Competition and Markets Authority from 13 January 2018, and the revised payment services directive known as PSD2.
The end result of all this is that the largest banks in the country are required to let their customers share their financial data with other authorised companies’ software and services.
It’s paved the way for innovative technology companies to come up with new tools and services that can be used for everything from managing a budget to searching for mortgage deals.
In essence, it gives individuals and businesses more control over their own financial data, and more options for what they do with it.
This goes hand-in-hand with many of the other developments we’re seeing across the technology sector: tech is becoming more connected, and developments like the general data protection regulation (GDPR) have put a greater emphasis on individuals’ ownership of their data.
Many of the most successful digital businesses are already using APIs to transfer information in a secure and efficient way, with companies like Google, Uber, Airbnb, PayPal and more employing various third-party APIs to gather data and enhance their service.
This technology is also a key component of Making Tax Digital, which requires taxpayers to share their accounting records via HMRC’s own API.
Using APIs and automation tools, consumers and businesses alike can create a system of software that handles their financial data with hardly any manual intervention.
If your online payment system can seamlessly connect your ecommerce store with your bank account, for instance, and your bank account can transfer data automatically to your accounting and forecasting software, it should only take a few clicks – or taps on a phone screen – for you to see an up-to-date picture of your financial position.
And the more tools are developed, the more people will be able to do with their data.
For some accountants, that’s a worry. If an app can handle your clients’ bank reconciliation, file their tax return, and produce reports based on their data, where do your services fit in?
The answer to this, we think, is that your services should do more. Accountants will be able to use the technology made possible by open banking, in combination with their own expertise, to offer more sophisticated and valuable advice.
We’ve already seen the difference cloud accounting alone can make when it comes to giving you more access to your clients’ data. Open banking should build on that, putting more information in your hands and saving the time you would otherwise have been spending on repetitive manual tasks.
It should push your firm to offer more data-driven services to clients, helping them to navigate the high volume of financial tools and information that will become available.
Capium offers a full suite of integrated cloud software for accountants, making it easy to provide a smarter, more streamlined service.
To find out how Capium can support your practice today in our ever-evolving world then book a free demo today. Speak to our product specialist today to start your journey to innovation and a streamlined practice now.