Xero is to add capability to take data feeds from 55 different UK banks into its online accounting application.
Automatic bank data links are well established in Xero’s home country of New Zealand, and one has been operating for HSBC banking customers in the UK. Now, according to Xero UK managing director Gary Turner, Xero will have links with all the main UK banks, with the exception of Barclays, which will come on stream in January.
“We launched HSBC service in May last year and now have over 1,000 customers hooked up,” said Turner. “The response has been as positive as in our other territories. The biggest feedback we’ve had is from people not on HSBC asking for their feeds to be available on Xero. That’s given us the impetus and motivation to roll this out.”
The Xero bank feed service will be expanded in stages, starting with a first wave this week. There will be no extra charge, Turner said. “You can take in feeds from different business bank accounts and credit cards and connect up with Xero in minutes.”
Automated banking is part of the second wave of Cloud innovation, he argued. The first wave saw the elimination of multiple data sets and the ability to access accounts on the web, anytime and anywhere there was a web connection. That was the “kindergarten” wave, according to Turner.
“The next wave – integration of bank feeds – means doing things that were not as easy before,” he said.
Importing bank data has been available in accounting software for years. Pegasus, for example, introduced a bank feed facility for Opera in 1997 when Turner used to work there, but withdrew it for lack of interest.
Where the Xero facility differs from previous attempts is that the bank transactions are imported automatically into the software. Xero includes a rules-based bank reconciliation system that can pre-reconcile your cash before you log in. Using a smartphone, desktop PC or remote laptop, the user can see instantly what their cash situation is and run through a reconciliation by approving or disapproving the individual transactions in the bank rec.
“Customers are telling us they are completing a daily banking job in 15-20mins that used to take them 90mins. It saves them time and gives them visibility on where they are,” said Turner.
“If accountants are used to helping clients with manual paperwork, that multiples the productivity. They can save 20-30% on internal efficiencies for each client.”
Warming to the subject of Cloud innovation, Turner argued that automated bank feeds were a profound development for accounting software.
“We think this is the beginning of a big change in the industy,” he said. “It’s been a pretty tepid space for 15 years, but innovation is back. In next 2-3 years if you’re trying to be serious about having accounting solution and don’t have [bank] feeds, you won’t be at the race.”
Turner added that Xero’s financial performance reflected the “massive uptake” of Cloud accounting. “Our UK results for the first half of 2010 were three and a half times what they were in 2009 and our monthly billings are 4-5 times what they were six months ago.”
In contrast, he noted, Sage’s results for this week showed a 3% growth in UK revenues for the year to 30 September 2010.
Turner said that many of the quibbles raised in AccountingWEB.co.uk’s Cloud computing for accountants discussion group were not representative of the conversations taking place in the marketplace. “Small businesses are going at it great guns. They don’t have a CIO or an IT strategy. For the price of a cup of coffee every day, they’re buying Xero. And if it doesn’t work out, they can get out of it very easily. We see that coming out of our numbers. Xero is heading for 30,000 customers within four years. We’re happy with our growth.”
Cloud software is also paving the way for what he calls “the rise of micro and small business”. These companies are being empowered in ways that weren’t possible before because the technology was so expensive.
“I think that means medium-sized businesses will be challenged the most. The small guys will try more deployable technology and will see the benefits in automated billing, optimised customer service, better credit control and mobility. And the mid-market buyers will stand there for 2-3 years trying to get their heads around it.”
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AccountingWEB’s Editor at large has been with the site since 1999, rising from news editor to editor in chief, global editor and head of insight. As a roving editor, he continues to investigate the profession's use of technology around the world. He devotes his spare time to technology history and an oddball collection of stringed instruments...