This autumn, Open Banking has been introduced to improve competition in the banking industry and make online banking more convenient for people and small businesses. This will affect how customers interact with various websites and apps, including our clients who use online accounting systems.
More about Open Banking
Open Banking means all UK-regulated banks must let you share your financial transaction data. This includes your payments, receipts, regular direct debits or standing orders.
This will mean that apps or other software will be able to access data easily and securely. As a bank customer, being able to compare accounts and access new products will help you to manage your money better.
There’s further information on the Open Banking website here.
Can I opt out?
As Open Banking is intended to give bank customers more control, there is no automatic opt-in. This means that you’ll only use Open Banking if you give consent to an app or website regulated by the Financial Conduct Authority (FCA).
I use Xero. What does Open Banking mean for me?
Open Banking is part of new EU industry-wide standards. To comply with the new requirements, some of Xero’s bank feed connections will be replaced by new direct bank feeds using Open Banking. Xero’s existing bank feeds will become unavailable.
With so many banks involved, this is a gradual process for Xero. Allowing for the FCA’s adjustment period of six months, each existing bank feed will have its own deadline some time between now and March 2020. These deadlines are being updated by Xero in its table here.
Xero will also inform users of these deadlines via its notifications.
If you’re currently using the affected bank feeds, you’ll need to change to the new bank feeds (where available) before the deadline. The good news is that this is a quick process: it should take less than five minutes to connect feeds with each bank.
We recommend watching Xero’s short video below on how you can change to a new bank feed.
Xero’s Open Banking resource page here is helpful too.
Our outsourcing team would also be happy to guide you through any changes you need to make
What will happen if bank feeds are not changed by the deadline?
If you miss the deadline to refresh the bank feed, the statements will need to be added manually and it might not be easy to complete bank reconciliations.
You will still be able to connect a bank feed at a later date and import up to 12 months of historical transactions – by selecting the start date of the bank feed when you authorise the connection – but this could be much less convenient for you.
What if I use different online accounting software like Sage or QuickBooks?
Other online accounting services will be affected by Open Banking in a similar way. We would be happy to advise you and to explore whether Xero would be a better option for you and your business.
For more information or to discuss Open Banking’s implications with our outsourcing team, please get in touch with your usual contact or use our enquiry form.