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Open Banking cuts admin headaches for accountants

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Richard McCall highlights how the combination of security and simplicity of implementation within Open Banking apps can help obliterate tedious administration

4th Aug 2021
Armalytix
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It is a story as familiar as it is frustrating: if only accountants could get clients to share information in a timely way, it would be simpler to help them make the right business decisions. 

Despite the growth in digital sharing through online accountancy packages, many accountants still struggle to get access to the original information from bank statements to verify the information and deal with any discrepancies. 

The administrative burden on accountants

Having launched in the UK in 2018, Open Banking may not initially be seen to provide a way to make this easier; it was primarily launched to help foster more competition in the banking sector – particularly for new and innovative competitors in financial services. But used in the right way, Open Banking can help businesses quickly and simply share specific and relevant financial information in a secure way.

The traditional methods of sharing financial information are still archaic: usually, the profession relies on either copying bank statements or CSV files shared by email. The best entrepreneurs do not necessarily make for the most efficient administrators and busy business owners have better things to do than chase around looking for paperwork. 

But this can be a huge frustration for accountants because it slows the process of timely access to relevant financial information – and wastes time. Even when information is shared quickly, there is a major administrative burden of uploading relevant information or manually typing it into another system. Either way, it is not an ideal way to operate.

A further issue is security and data verification – as outlined by Mohit Baheti, director of operations at Online Account Filing: “When clients share an Excel version of a bank statement, which is typically a CSV file, we never know how authentic it is. 

"They may have edited the file and tweaked the information prior to sharing. Sending bank statements via email attachments also comes with security risks, as email encryptions do not typically encrypt attached files.” 

Open Banking – fast and secure

This is where Open Banking can make a difference. Allowing a common way to share information, Open Banking lets accountants and small businesses share financial information quickly and simply. Accountants can make a request for bank statement information within a secure platform (typically a third-party app that uses Open Banking protocols to directly access relevant financial information). 

The request can be for specific dates and even multiple bank accounts. The business owner can quickly authorise the request via a banking app and the information is securely shared in real time. There is no waiting, hassle or chasing.

The process saves time and effort – in many cases days’ worth of chasing and longer still in either manually retyping information or importing it into an accounting platform. By reducing the manual input, human error is reduced.

Open banking has been designed to be secure. It uses rigorously tested software and security so users are never asked for bank logins or passwords other than by the bank itself. Only apps and websites regulated by the FCA or European equivalent can enrol in Open Banking. 

Access to financial data is only provided with the express permission of the data owner, who can limit the timespan of information or authorise for a single use. Users of Open Banking are also protected by data protection laws and the Financial Ombudsman Service.

Seamless, reliable, historical data

It should not be difficult for accountants to get access to reliable data. Open Banking helps smooth this process between businesses and accountants. By using this process across all his clients, Baheti believes his firm is saving up to 10 hours of work per person per week. 

Perhaps equally, or more important, is the impact that access to up-to-date information can have on business decision making. Decisions are only as good as the data they are based on. Business owners rely on their accountants to highlight potential issues a business might experience. 

By deploying Open Banking to help ensure the accuracy of this information – and sharing it in a timely manner – business owners can rely on advice from accountants that is based on real and present data. This is a strong reason to investigate how Open Banking can help speed the sharing of information.

Replies (5)

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By JD
05th Aug 2021 13:37

Nonsense - the 90 day reauthorisation process has done nothing but significantly slow down and frustrate the work of accountants. In short it has turned what should be automated into a process that requires significant manual time and effort. The effect has been the opposite of what you are saying in this article

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Replying to JD:
By Michael Beaver
05th Aug 2021 14:22

I'm pretty sure I read somewhere that they are looking at the 90 day reauthorisation period as being problematic so I'm hopeful that that will be extended significantly.

I still think open banking is better than what came before, especially for clients not on cloud software. We're able to use third party tools to get bank statements for the right dates, which works if the client is happy to use internet banking.

Having said that we still have a few dinosaurs who refuse to interact with online banking - or online anything for that matter. If only we had a solution for that!

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Replying to JD:
Richard McCall
By Richard McCall
06th Aug 2021 19:04

I certainly agree that the 90-day reauthentication issue is a tricky one - balancing regulators' desire to ensure that consumers do not grant access that they then forget about with the ability to ensure ongoing access is something that has been debated since PSD2 was first applied, and I definitely do not think the current set up is ideal. Armalytix is one of several industry members working closely with the FCA through the Financial Data Association (FDATA) to improve the application of the 90-day reauthentication requirement, and as mentioned by a reader below, it looks likely that the 90-day rule will soon be changed to remove the need for consumers to reauthenticate with their bank each time, instead being able to reauthenticate only once with the Open Banking provider such as Armalytix. Whilst this would be a big step forward, we have in fact gone further than this and proposed a delegated authority model whereby consumers will be able to authorise trusted advisors such as accountants and lawyers to reauthenticate on their behalf, which we would expect to remove almost all the friction associated with the process.

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By Winnie Wiggleroom
06th Aug 2021 06:14

clearly the author of this article has never had to chase 100 clients every 90 days to update the bank feed, and then chase them again when they fail to do so and chase them again when it has lapsed so long that there are 3 weeks transactions missing and chase them again when they connect the wrong bank to the wrong entity, oh and in the meantime answer the questions from them on how to do it even though they did it 90 days ago.

Until finally you give up and ask for PDF or a csv if they know how to do that

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By Mike Berks
06th Aug 2021 08:31

No doubt that open banking in my experience has created as many problems as it solved for bank feeds. But to the extent you need a bank statement it’s made it far easier and quicker to get accurate secure statements information back from clients.

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