FreeAgent takes the lead on open banking
Royal Bank of Scotland subsidiary FreeAgent has opened up its online accounting system to access bank data feeds via open banking interfaces.
While staking a claim to be the first UK accounting software to comply with the new open banking infrastructure that came into being a year ago, FreeAgent will test the standardised feeds with a small group of RBS and NatWest customers before they are offered to customers of other banks. This wider rollout will happen over the next year, FreeAgent said.
CEO Ed Molyneux explained some of the nuances to AccountingWEB: “The industry is in a state of transition at the moment. Most serious accounting software vendors have supported feeds for years, either bespoke ones they built themselves or through data aggregators like Yodlee.
“Thanks to the Payment Services Directive (PSD2) that landscape is changing to open banking so yodlee-style ‘screen scraping’ is becoming less viable. The big banks are also getting on the open banking bandwagon [because the Competition and Markets Authority told them to] and that’s clearly the direction the whole industry is going.”
If it’s an open standard, what’s holding FreeAgent back from supporting other banks? “Authentication journeys aren’t standardised,” Molyneux replied. “There are things that aren’t in the standard, so it takes extra work to support other open-banking institutions. It’s not quite a ‘build once, connect to many’ process as we hoped it would be, but it will get to that point over time.”
In the company’s press release announcing the new open interface, Molyneux looked forward to “a whole ecosystem of fintech apps, features and services” that will make it easier for people to run their businesses.
Banking and accounting converge
Open banking application programming interfaces (APIs) will go beyond daily data feeds and to include direct debits, standing orders and the ability to initiate payments within accounting software, he explained. This will create new customer experiences and equip accounting applictions to do more of the things that people are beginning to do with online and mobile banking, for example by aggregating data across multiple accounts, Molyneux said.
FreeAgent has been working alongside its bank parent to explore some of these possibilities, but for now Molyneux was reluctant to reveal the types of fintech experiments the company was conducting.
“We like to show rather than tell,” he said. “We will talk about what’s happening when they’re ready. What we are doing is taking logical steps to connect banking and accounting. What emerges won’t necessarily be the traditional accounting functions that you’d expect, but the premise that everything is converging together underpins all [of our experiments].”
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