“We want to move from hindsight to foresight”. That, says NatWest’s Haydn Thomas, is the ultimate aim of the banking giant’s partnership with cloud accounting developer FreeAgent.
To recap: under the partnership formed at the beginning of this year, NatWest/RBS will offer FreeAgent to its business customers for free, on the basis that the client shares their accounting data with NatWest through FreeAgent.
“By linking a business’s accounting data to their bank account we can have much more in-depth discussions with our customers about their futures and their business plans,” said Thomas at the bank’s Boost event in Bristol recently (see video below).
“NatWest wants to be proactive – a true relationship bank right across the spectrum,” he continued. “Anything we can plug into those systems that can give us real time data and some accurate forecasts is really helpful.”
This “wraparound care” arrangement is voluntary and will be open to existing FreeAgent customers too.
Accountants will be able to join the NatWest/FreeAgent “advisory eco-system” by paying a £3.00 monthly subscription per client, according to FreeAgent chief commercial officer Kevin McCallum.
For FreeAgent the partnership will deliver a much-needed surge to its user numbers, but managing director Ed Molyneux explained that the deal was important to position the company within the rapidly expanding “fintech” [financial technology] universe.
“It’s very interesting to sit in the middle of this ecosystem with banks on one side and accountants on other. Bringing them together is something we’re interested in doing,” Molyneux said.
For a bank seeking to repair its reputation with small businesses, the link with accounting software is a sensible defensive move. As lending relationships between small businesses and big banks cooled following the financial crisis, the alternative finance scene has boomed. Cloud systems that can pass financial data and facilitate online risk assessments are a key part of the fintech formula.
“One of the barriers banks face when they think about lending to small businesses is data on those businesses. It’s very hard to get accurate data without having some kind of real time accounting system in place,” Molyneux said of the NatWest deal.
The timing of the partnership is important too, according to Kevin McCallum. From May next year, Europe will require banks to make their account data accessible via open banking application programming interfaces (APIs). The FreeAgent-NatWest tie up will be based on direct integration, available before the turn of the year, and will be a precursor of what will happen between banks and online accounting systems over the next two years.
“Data from the bank flows to FreeAgent, and flows back,” McCallum said. “Much tighter integration equals a better experience for customers.” The option to let the bank see live accounting data will be included in the package as a means to enable swifter finance or cashflow help if it is needed. Among test users, this feature was not encountering too much resistance, McCallum said. “They can see the advantages.”
While offering hints of what is to come, Thomas would not be drawn on the full details of its NatWest’s integrated finance offerings, but vowed that the resulting simplification of the bank-small business relationship will allow “accountants to be accountants”, freeing them to focus on advisory services.
About John Stokdyk
AccountingWEB’s Head of Insight has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.